Economic growth and abatement activities in a stochastic environment: a multi-objective approach

Simone Marsiglio, Davide La Torre

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

We analyze the effect of uncertainty on economic growth and environmental quality in a concave stochastic bicriteria dynamic problem, solved by means of scalarization techniques and the Hamilton–Jacobi–Bellman equation. Specifically, we focus on an endogenous growth model with purposive abatement activities, where environmental quality, subject to random shocks, is merely a source of utility and does not play any productive role. We show that even in the absence of direct (environmental) productivity effects, along the optimal path production results enhanced by an indirect productivity effect, which transforms environmental quality into the engine of growth. However, this does not prevent uncertainty to dampen economic and environmental performance, leading to a lower social welfare than in a deterministic framework.

Original languageEnglish
Pages (from-to)321-334
Number of pages14
JournalAnnals of Operations Research
Volume267
Issue number1-2
DOIs
Publication statusPublished - Aug 1 2018

Keywords

  • Economic growth
  • Environmental quality
  • Multiobjective
  • Optimization
  • Uncertainty

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Management Science and Operations Research

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