ENVIRONMENTAL PROTECTION AND ECONOMIC GROWTH

This paper explores the link between environmental policy andeconomic growth by employing an extension of the AK Growth Model. Weinclude a state equation for renewable natural resources. Weassume that the change in environmental regulations inducescosts and that economic agents also derive some utility fromcapital stock accumulation vis-a-vis the environment.Using the Hopf bifurcation theorem, we show that cyclicalenvironmental policy strategies are optimal, providingtheoretical support for the Environmental Kuznets Curve.This paper explores the link between environmental policy andeconomic growth by employing an extension of the AK Growth Model. Weinclude a state equation for renewable natural resources. Weassume that the change in environmental regulations inducescosts and that economic agents also derive some utility fromcapital stock accumulation vis-a-vis the environment.Using the Hopf bifurcation theorem, we show that cyclicalenvironmental policy strategies are optimal, providingtheoretical support for the Environmental Kuznets Curve