Stochastic environmental effects, demographic variation, and economic growth
Théophile T. Azomahou & T. Mishra
#2009-016
We consider a stochastic environment to study interactions among
pollution growth, demographic changes, and economic growth. Drawing on
the empirical findings of slow convergence patterns of pollution shocks
(viz., with a long-memory), we build an analytical framework where
stochastic environmental feedback effects on population changes are
reflected upon aggregate economic growth. Long-memory in economic
growth, in our model, is shown to arise due to the inherent
stochasticity in environmental and demographic system. Empirical results
for a set of developed and developing countries generally support our
conjecture. Simulation experiment is carried out to lend additional
support to this claim.
JEL Classification codes: C13, J11, O47
Key words: Environmental quality, long-memory, demographic dynamics,
economic growth
UNU-MERIT Working Papers
ISSN 1871-9872