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.


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.

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