Sufficient and Necessary Conditions for Non-Catastrophic Growth

The reader will find in this paper a simple theoretical framework where to analyze the usual issues from environmental and economic growth literature, including the problem of global warming, the corresponding climate change, and the impact on economic system. This paper considers two environmental externalities: the first one is local and gives account of the marginal damage from emissions flow; the second one is aggregate, or global, and relates to the extreme damage which may happen if the accumulated stock of pollutants is on the threshold of a worldwide catastrophe. In this context dominated by market failures, the decentralized equilibrium path is inefficient and unsustainable, while the socially optimal balanced growth path shows a singularity with trajectories truncating and changing of course. With respect to the economy's long-run performance we s how environment matters in different ways and at different stages, and give conditions for sustainability of sustained growth.tudy