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.
Original language | English |
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Pages (from-to) | 314-345 |
Number of pages | 32 |
Journal | The Manchester School |
Volume | 83 |
Issue number | 3 |
DOIs | |
Publication status | Published - Jun 2015 |
Keywords
- ENDOGENOUS GROWTH
- TIME-SERIES
- MODEL
- COINTEGRATION
- ENVIRONMENT
- IMPACT
- STATES