Endogenous growth and environmental policy

This paper examines the relationship between environmental policy and growt h, from the perspective of endogenous growth theory. In particular three st andard endogenous growth models are supplemented with environmental issues, such as pollution and exhaustibility of natural resources. It is found tha t these new elements may affect the long run growth rates, but this is not a universal outcome. One consequence for economic policy is that optimal ta xation to realize a social optimum should take account of environmental iss ues.