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In the standard AK growth model we introduce the threat of an ecological catastrophe and study the consequences for the economic variables in the long-run. We extend the basic framework by considering two environmental externalities: the first one is local and gives account of the marginal damage from emissions flow; the second one is aggregate, or global, and relates to the extreme damage which may happen if the accumulated stock of pollutants is on the threshold of a worldwide catastrophe. In this context dominated by market failures, we focus on the socially optimal solution and the search of conditions for sustainability. We identify the efficient balanced growth path, which may even show a singularity with trajectories truncating and changing course. In short, with respect to the economy’s long-run performance, we study how environment matters in different ways and at different stages, giving conditions to prevent the catastrophe and preserve (a lower) sustained growth. This paper may also be read as a clear and rigorous example of an optimal control problem involving a pure state-space constraint.

Sustainability and optimality are the two main issues discussed in environmental economics and economic growth theory. This paper studies economic growth in the presence of two environmental externalities. The first one is local and gives account of the marginal damage from the emissions flow. The second one is aggregate, or global, and relates to the extreme damage which may happen if the accumulated stock of pollutants is on the threshold of a worldwide catastrophe. In this context, the decentralized equilibrium is inefficient and economic growth unsustainable. However, we find and completely characterize the socially optimal equilibrium, which shows that sustained growth is feasible along the balanced path. Efficiency alone is not sufficient for sustainability, but Pareto optimality is necessary to produce sustainable outcomes. According to our results, the sustainability of the optimal sustained long-run growth depends on environmental constraints, production and abatement technologies, individual preferences, and population dynamics. This means that government has a clear incentive for intervention by means of direct and indirect policies. These ones cover the usual Pigouvian taxes and subsidies, the setting of emission standards, and the public provision of abatement. Moreover, the government can promote eco-efficiency in the use of materials, implement information campaigns that influence social preferences for environmental conservation, or even put into action population controls and other measures that encourage the demographic transition.

We study the sustainability of long-run growth in a two-sector economy where a renewable natural resource is exploited under private property rights. We obtain short- and long-run growth trajectories in closed form, examine transitional dynamics, and characterize convergence properties. We find conditions for sustainable long-run growth, which depend on the harvesting rate, and show that the speed of convergence decreases during transition. We identify a stronger version of Hartwick's rule and analyze parameter dependences for endogenous variables. Economic growth relies less on abundance or scarcity of natural resources than on the way they are managed.

We study the one sector model of growth when a linear production technology is combined with adjustment costs and a technology for capital maintenance. Agents are allowed to under-use the installed capital and to vary the depreciation rate. This economy decides endogenously how much resources devotes to the accumulation of new capital and how much to maintenance and repair activities. We find as striking results that the long-run depreciation and capital utilization rates are positively related to the population growth rate, and that both depend negatively on the intial conditions. The long-run growth rate appears positively correlated with the depreciation rate.

We study an extended version of the one-sector AK growth model introducing adjustment and maintenance costs. Agents are allowed to under-use the installed capital and to vary the depreciation rate. The model is analyzed using particular functional forms and is solved in closed-form. We find that adjustment and maintenance costs (e?- ciency) reduce (increases) investment, depreciation, capital utilization and the rate of growth; impatience reduces the rate of growth but increases depreciation and utilization, which are also negatively related to the rate of population growth; the rate of growth appears positively correlated with the depreciation rate and the rate of capital utilization.

The competitive equilibrium in an endogenous growth model is not Pareto-optimal nor environmentally sustainable in presence of pollution externalities, even if costly abatement activities are allowed to be endogenously decided. In this paper we introduce the possibility of an ecological catastrophe by imposing an upper-limit to the pollutants stock. We characterize the socially optimal solution and study sustainability of the long-run balanced growth path. We find that the rate of growth depends negatively on the weight of environmental cares in utility and positively on the population growth rate. The latter effect is stronger as higher is the weight of environment in the utility function. We also identify some policies the central planner could undertake looking to guarantee sustainability. An EKC is derived in the long term using the implications of the demographic transition for the rate of population growth, and the accompanying variation in the willingness to pay for environmental quality as the economy develops.

Este estudio ofrece una evaluación empírica de los efectos económicos de las ayudas europeas de cohesión recibidas por España entre 1989 y 2006, lapso de tiempo que abarca los tres últimos periodos de programación financiera de la Unión Europea y a lo largo del cual nuestro país habrá recibido más de 105 mil millones de euros a precios de 1999. A partir de los importes ejecutados de Fondos Estructurales y del Fondo de Cohesión hasta 1999 y de los importes programados para el período 2000-2006, utilizamos el modelo HERMIN-España con objeto de establecer una evaluación cuantitativa de los efectos macroeconómicos de este importante paquete de ayudas comunitarias orientado hacia las infraestructuras, el capital humano y las ayudas productivas a las empresas. Los resultados obtenidos sugieren que tales ayudas habrían contribuido significativamente al crecimiento económico español y al impulso del nivel de renta y empleo. Los sucesivos programas de ayudas recibidos entre 1989 y 2006 supondrán una ganancia media de casi cuatro décimas de punto porcentual en la tasa real de crecimiento anual de la economía española respecto a la situación que hubiese prevalecido sin ayudas comunitarias. Esta ganancia se habría traducido en un incremento medio de la renta por habitante de 638 euros (a precios de 1999) en todo el periodo que, para el periodo 2000-2006 habrá alcanzado los 1.027 euros por persona, sin cuyos avances estaríamos en 2006, hoy a efectos prácticos, ceteris paribus, casi seis puntos porcentuales por debajo en nuestro indicador de renta por habitante relativa a la media de los Quince. Respecto al mercado de trabajo, estimamos que las ayudas europeas habrían generado o mantenido, en términos medios durante el periodo 1989-2006, un 2,07 por ciento más de empleo que el que se habría observado de no recibirse tales ayudas, unos 300 mil empleos, lo cual implicaría una reducción media de la tasa de paro de casi dos décimas de punto porcentual a lo largo del mismo periodo. Para finalizar realizamos una simulación de las consecuencias derivadas de la reducción de las ayudas comunitarias resultante de la convergencia natural o estadística de muchas regiones españolas del Objetivo nº 1.