Endogenous Growth Effects of Environmental Policies

  • Oscar Afonso University of Porto, Faculty of Economics, and OBEGEF, Portugal
  • Ana Catarina Afonso University of Porto, Faculty of Economics, Portugal


To analyse the impact of the environmental policies, we start by reviewing the literature on the environment, technological knowledge and economic growth. Then, we build a general equilibrium endogenous growth model where final goods are produced either in the skilled-labour intensive Clean sector or in the unskilled-labour intensive Unclean sector. By solving numerically transitional dynamics towards the unique and stable steady state, we observe that environmental policies encourage scale-invariant technological-knowledge bias. This, in turn, promotes environmental quality, the skill premium and economic growth. Moreover, the impact of population growth on the steady-state growth rate is higher under strong households’ environmental conscientiousness with future generations.

Key words: (Un)Clean sector, Environmental policies, Environmental conscientiousness, Growth, Wages.
JEL: C63, J31, O13, O31, Q55, Q58.

How to Cite
Afonso O., & Afonso A. (2015). Endogenous Growth Effects of Environmental Policies. Panoeconomicus, 62(5), 607-629. doi:10.2298/PAN1505607A
Original scientific paper