Nonhomothetic growth models for the environmental kuznets curve

Shibayama, Katsuyuki, Fraser, Iain M (2014) Nonhomothetic growth models for the environmental kuznets curve. International Economic Review, 55 (3). pp. 919-942. ISSN 1468-2354. E-ISSN 1468-2354. (doi:10.1111/iere.12076) (KAR id:42840)

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Abstract

We show the role of the elasticity of substitution between general consumption and the environment in environmental degradation. Specifically, our numerical experiments demonstrate, for a wide range of models, exponential utility generates the environmental Kuznets curve without adding any special assumptions. With exponential utility, the elasticity of substitution and hence the substitution effect between consumption and the environment are both decreasing in income. Hence, when income is low, society (the government) readily gives up environmental quality in return for more consumption, but it does not want to substitute consumption for the environment anymore, once it becomes wealthy enough.

Item Type: Article 10.1111/iere.12076 Environmental Kuznets Curve, Economic Growth, Non-Homothetic Preferences, Generalized Isoelastic Preferences. H Social Sciences > HB Economic Theory Faculties > Social Sciences > School of Economics Katsuyuki Shibayama 05 Sep 2014 13:55 UTC 06 Feb 2020 04:10 UTC https://kar.kent.ac.uk/id/eprint/42840 (The current URI for this page, for reference purposes) https://orcid.org/0000-0003-3472-398X https://orcid.org/0000-0002-4689-6020