ECONOMIC GROWTH UNDER STOCHASTIC POPULATION AND POLLUTION SHOCKS

TY - JOUR

T1 - ECONOMIC GROWTH UNDER STOCHASTIC POPULATION AND POLLUTION SHOCKS

AU - Azomahou, Theophile T.

AU - Mishra, Tapas

AU - Parhi, Mamata

PY - 2015

Y1 - 2015

N2 - We study dynamics of interactions among economic growth, population, and environmental quality when stochastic shocks in these systems display long-memory property. We make two important contributions. First, we show that the long-memory persistence in economic growth is determined jointly by the convergence speed of shocks in both environmental quality and population. Second, by simulating a modified Solow-Swan economy we demonstrate that the convergence-speed of shocks in these systems significantly affects the long-run growth trajectory of output. Our empirical examination evince that adjustment of output to long-run equilibrium is very slow, thanks to the slowly dissipating population and pollution shocks.

AB - We study dynamics of interactions among economic growth, population, and environmental quality when stochastic shocks in these systems display long-memory property. We make two important contributions. First, we show that the long-memory persistence in economic growth is determined jointly by the convergence speed of shocks in both environmental quality and population. Second, by simulating a modified Solow-Swan economy we demonstrate that the convergence-speed of shocks in these systems significantly affects the long-run growth trajectory of output. Our empirical examination evince that adjustment of output to long-run equilibrium is very slow, thanks to the slowly dissipating population and pollution shocks.

U2 - 10.1111/manc.12062

DO - 10.1111/manc.12062

M3 - Article

SN - 1463-6786

VL - 83

SP - 314

EP - 345

JO - MANCHESTER SCHOOL

JF - MANCHESTER SCHOOL

IS - 3

ER -