The environmental and macroeconomic effects of socially responsible investment |
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Authors: | Lammertjan DamBen J. Heijdra |
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Affiliation: | a University of Groningen, The Netherlands b IHS, Vienna, Austria c CESifo, Germany d Netspar, The Netherlands |
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Abstract: | We analyze the effects of socially responsible investment and public abatement on environmental quality and the economy in a continuous-time dynamic growth model featuring optimizing households and firms. Environmental quality is modeled as a renewable resource. Consumers can invest in government bonds or firm equity. Since investors feel partly responsible for environmental pollution when holding firm equity, they require a premium on the return to equity. We show that socially responsible investment behavior by households partially offsets the positive effects on environmental quality of public abatement policies. |
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Keywords: | Socially responsible investment Economic growth Environmental economics Resource dynamics Stock market |
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