Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229563
Authors: 
Jin, Wei
van der Ploeg, Rick
Zhang, Lin
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8745
Abstract: 
This paper presents a two-sector green endogenous growth model to explore a mechanism that explains why carbon-intensive capital is not necessarily shut down during transition to a green economy. Without accumulating clean capital to offset carbon emissions, a tightening of climate regulation leads to the running down of carbon-intensive capital. However, if climate regulations induce stepping-up of carbon-free capital to offset warming damages, the economic value of carbon-intensive capital can be protected and the running down of carbon-intensive assets can be mitigated. The use of carbon-intensive capital gives the economic means to enhance clean capital accumulation and sustain endogenous growth. Both carbon-intensive and carbon-free capital may thus be needed for an efficient transition to green growth.
Subjects: 
endogenous growth
green growth
two-sector growth model
climate policy
JEL: 
Q54
Q43
Q32
O13
O44
C61
Document Type: 
Working Paper

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