The relevance and implications of the environmental Kuznets hypothesis are examined in the presence of stock effects and non-linearities associated with pollution generation. Stock effects lead to hysteresis and irreversibilities in environmental quality that are overlooked when emphasis is placed on the flow effects of pollutants only. It is demonstrated here that an optimal growth plan in the presence of stock effects shifts the focus away from prescribing economic growth as a panacea for environmental ills. Implications for currently industrializing economies are discussed. © 2007 Elsevier B.V. All rights reserved.

Ram Ranjan

Economics

(SoHSS) School of Humanities and Social Sciences

J. Shortle

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