Examining a Green Growth Model for Policy Implications

Utilizing a simple growth model that includes the energy resource as an essential input, the possibility of a cleaner environment as well as larger income is demonstrated. Growth rates need not be lowered to have a cleaner environment, and the energy output ratio may be reduced. Pollution generated as side effects makes it necessary for policy makers to come up with suitable policies. In this regard, several policy options are proposed. Pollution tax (more generally, an environment tax) and a subsidy for energy and anti-pollution (environment) related technological progresses are such examples. A judicious mix of those policies can make income larger, energy usage smaller, and pollution level lower.