The environmental Kuznets curve and the structural change hypothesis

Authors

Simone Marsiglio, University of WollongongFollow
Alberto Ansuategi, University of The Basque Country
Maria Carmen Gallastegui, University of The Basque Country

RIS ID

102471

Publication Details

Marsiglio, S., Ansuategi, A. & Gallastegui, M. Carmen. (2016). The environmental Kuznets curve and the structural change hypothesis. Environmental and Resource Economics, 63 (2), 265-288.

Abstract

We provide a very simple macroeconomic investigation of the role that structural changes might play in generating inverted U-shaped income-pollution relationships. Differently from previous research which mainly focuses on empirical, static or general equilibrium models, we develop a standard balanced growth path (BGP) analysis. We show that along the BGP equilibrium an inverted U-shaped income-pollution relationship may occur as a response to structural changes, but whether this is the case or not it will crucially depend upon the magnitude of a production externality parameter. Moreover, we show that the negative relationship between income and pollution can only be a transitory phenomenon, and in the long run pollution will increase as income rises, generating overall an N-shaped pattern.