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Climate change and growth

Stern, Nicholas and Stiglitz, Joseph E. (2023) Climate change and growth. Industrial and Corporate Change, 32 (2). 277 - 303. ISSN 0960-6491

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Identification Number: 10.1093/icc/dtad008

Abstract

Contrary to much of the conventional wisdom, taking stronger actions on climate change may enhance economic growth, even as conventionally measured, but even more so, in terms of societal well-being. We identify the flaws in the models and analyses which contend that there must be a trade-off and explain the mechanisms and dynamic forces which have the potential to enhance growth. Critically, there are numerous market failures that result in suboptimal economic performance. We explain how addressing climate change reduces the bite of these failures and enhances the incentives and political will to address them. We identify packages of policies that alleviate market failures, enhance growth, and reduce carbon emissions. Finally, we argue that the green transition is coming at a time when, both because of persistent deficiencies of aggregate demand and advances in technology, including artificial intelligence and robotization, the macroeconomic opportunity costs of strong climate actions may be especially low and the benefits particularly high.

Item Type: Article
Official URL: https://academic.oup.com/icc
Additional Information: © 2023 The Authors
Divisions: Economics
Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HB Economic Theory
JEL classification: O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O49 - Other
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy
Date Deposited: 02 Feb 2023 10:30
Last Modified: 23 Feb 2024 17:24
URI: http://eprints.lse.ac.uk/id/eprint/118100

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