The relationship between environment and growth:a model with externalities due to pollution

Abstract

The goal of this paper is to analyse the relationship between economic growth and environment. We will take into account the neoclassical growth model and we will include the negative externalities on production derived from pollution. In this case, we will be able to study how the basic conclusions of the neoclassical growth model change. The results justi:tY that opposite measures to those defended by traditional neoclassical models must be introduced to improve long term per capita income. These policies must be coordinated with the environmental policy that reduces the negative effects derived from the pollution externalities.