BC3-UPV/EHU Seminars: Local and Global Externalities, Environmental Policies and Growth

BC3-UPV/EHU Seminars
“Local and Global Externalities, Environmental Policies and Growth “

Seminar given by Prof. Dr. Karen Pittel (Head of Department Energy, Environment and Exhaustible Resources Ifo Institute for Economic Research, Munich)

Abstract

The paper analyzes the implications of local and global pollution when two types of abatement activities can be undertaken. One type (e.g., use of particulate matter filters) reduces solely local pollution while the other (e.g., application of fuel saving technologies) mitigates global pollution as well. In the framework of a 2-country endogenous growth model, the implications of different assumptions about the degree to which global externalities are internalized are analyzed. Subsequently, we derive policy rules adapted to the different scenarios as well as to implement the first-best solution. Special attention is paid to pollution, growth and optimal policy in the case of asymmetric internalization.