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The unilateral implementation of a sustainable growth path with directed technical change

Journal article
Authors Inge van den Bijgaart
Published in European Economic Review
Volume 91
Pages 305-327
ISSN 0014-2921
Publication year 2017
Published at Department of Economics
Pages 305-327
Language en
Keywords Directed technical change, Trade, Unilateral environmental policy
Subject categories Economics


We determine the conditions under which unilateral policies can implement global sustainable growth in a dynamic two-country directed technical change framework. Domestic climate policies alter the structure of domestic and foreign production and thereby innovation incentives across countries. Implementing sustainable growth requires redirecting global innovation to the nonpolluting sector. If most innovation takes place in the foreign country, policies must redirect foreign innovation by relocating clean production to the foreign country. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that ratified the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.

Page Manager: Webmaster|Last update: 9/11/2012

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