FEEM working papers "Note di lavoro" series
2015 .011

The Unilateral Implementation of a Sustainable Growth Path with Directed Technical Change


Authors: Inge van den Bijgaart
Series: Climate Change and Sustainable Development  
Editor: Carlo Carraro
Keywords: Sustainable Growth, Technical Change, Innovation
JEL n.: Q5, Q56

Abstract

We determine the core characteristics of a climate coalition’s optimal policies in a dynamic two country directed technical change framework. Unilateral policies alter the structure of production and thereby innovation incentives across countries. Whenever feasible, optimal policies implement sustainable growth by directing global innovation to the nonpolluting sector. If nonparticipants drive global innovation, this requires policies relocating clean production to nonparticipants. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that signed the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.

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Suggested citation: van den Bijgaart, I., (2015), 'The Unilateral Implementation of a Sustainable Growth Path with Directed Technical Change', Nota di Lavoro 11.2015, Milan, Italy: Fondazione Eni Enrico Mattei.

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