We analyze the effect of uncertainty on economic growth and environmental quality in a concave stochastic bicriteria dynamic problem, solved by means of scalarization techniques and the Hamilton–Jacobi–Bellman equation. Specifically, we focus on an endogenous growth model with purposive abatement activities, where environmental quality, subject to random shocks, is merely a source of utility and does not play any productive role. We show that even in the absence of direct (environmental) productivity effects, along the optimal path production results enhanced by an indirect productivity effect, which transforms environmental quality into the engine of growth. However, this does not prevent uncertainty to dampen economic and environmental performance, leading to a lower social welfare than in a deterministic framework.

Economic growth and abatement activities in a stochastic environment : a multi-objective approach / S. Marsiglio, D. La Torre. - In: ANNALS OF OPERATIONS RESEARCH. - ISSN 0254-5330. - 267:1-2(2018 Aug 01), pp. 321-334. [10.1007/s10479-016-2357-3]

Economic growth and abatement activities in a stochastic environment : a multi-objective approach

S. Marsiglio;D. La Torre
2018

Abstract

We analyze the effect of uncertainty on economic growth and environmental quality in a concave stochastic bicriteria dynamic problem, solved by means of scalarization techniques and the Hamilton–Jacobi–Bellman equation. Specifically, we focus on an endogenous growth model with purposive abatement activities, where environmental quality, subject to random shocks, is merely a source of utility and does not play any productive role. We show that even in the absence of direct (environmental) productivity effects, along the optimal path production results enhanced by an indirect productivity effect, which transforms environmental quality into the engine of growth. However, this does not prevent uncertainty to dampen economic and environmental performance, leading to a lower social welfare than in a deterministic framework.
Economic growth; Environmental quality; Multiobjective; Optimization; Uncertainty
Settore SECS-S/06 - Metodi mat. dell'economia e Scienze Attuariali e Finanziarie
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/488380
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