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Journal Articles The Manchester school of economic and social studies Year : 2015

Economic Growth under Stochastic Population and Pollution Shocks

Abstract

We study dynamics of interactions among economic growth, population, and environmental quality when stochastic shocks in these systems display long-memory property. We make two important contributions. First, we show that the long-memory persistence in economic growth is determined jointly by the convergence speed of shocks in both environmental quality and population. Second, by simulating a modified Solow-Swan economy we demonstrate that the convergence-speed of shocks in these systems significantly affects the long-run growth trajectory of output. Our empirical examination evince that adjustment of output to long-run equilibrium is very slow, thanks to the slowly dissipating population and pollution shocks.

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hal-01736166 , version 1 (16-03-2018)

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Théophile Azomahou, Tapas Mishra, Mamata Parhi. Economic Growth under Stochastic Population and Pollution Shocks. The Manchester school of economic and social studies, 2015, 83 (3), pp.314 - 345. ⟨10.1111/manc.12062⟩. ⟨hal-01736166⟩
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