TY - JOUR
T1 - Endogenous aspirations, growth and the rise of environmental concerns
AU - Bouché, Stéphane
AU - Miguel, Carlos de
PY - 2019/10
Y1 - 2019/10
N2 - In this paper, we analyze the implications of assuming that the intensity of aspirations is endogenous. In accordance with empirical evidence, consumption aspirations decrease with capital accumulation while environmental ones increase. We show that such a change in the intensity of aspirations gives rise to a U-shaped relationship between capital accumulation and environmental quality. We also study the implications of our assumption concerning the optimal allocation and show that the steady-state capital stock can be larger or smaller than the one corresponding to the modified golden rule. In addition, for realistic parameter values, the decentralization of the optimal allocation requires the implementation of a maintenance investment subsidy and a lump-sum transfer from the old to the young generation.
AB - In this paper, we analyze the implications of assuming that the intensity of aspirations is endogenous. In accordance with empirical evidence, consumption aspirations decrease with capital accumulation while environmental ones increase. We show that such a change in the intensity of aspirations gives rise to a U-shaped relationship between capital accumulation and environmental quality. We also study the implications of our assumption concerning the optimal allocation and show that the steady-state capital stock can be larger or smaller than the one corresponding to the modified golden rule. In addition, for realistic parameter values, the decentralization of the optimal allocation requires the implementation of a maintenance investment subsidy and a lump-sum transfer from the old to the young generation.
KW - Endogenous aspirations
KW - Environmental quality
KW - Overlapping generations
UR - http://www.scopus.com/inward/record.url?scp=85075442198&partnerID=8YFLogxK
U2 - 10.1016/j.eneco.2019.104526
DO - 10.1016/j.eneco.2019.104526
M3 - Article
AN - SCOPUS:85075442198
SN - 0140-9883
VL - 84
JO - Energy Economics
JF - Energy Economics
M1 - 104526
ER -