In this paper we use Pindyck's model (2002) to show that the discount rate may play an important role in explaining for the income-pollution pattern observed in the real world. Low levels of income involve high values of discount rate, that are obstacles to the adoption of a pollution abatement...

In this paper we use Pindyck's model (2002) to show that the discount rate may play an important role in explaining for the income-pollution pattern observed in the real world. Low levels of income involve high values of discount rate, that are obstacles to the adoption of a pollution abatement...

Using an endogenous growth model where the discount rate is a function of consumption, we show that the condition in which the elasticity of the marginal utility of consumption is greater than one ensures, at the same time, the existence of an unique saddle point equilibrium and the maximization...