In this paper we contribute to the debate on the relationship between growth and well-being by examining an endogenous growth model where we allow for externalities in consumption, leisure, and production. We analyze three regimes: a decentralized economy where each household makes isolated choices without considering their external effects, a planned economy where a myopic planner fails to recognize both leisure and consumption externalities but recognizes production externalities, and a planned economy with a fully informed planner. We first compare the balanced growth paths under the three regimes and then we numerically investigate the transition to the optimal balanced growth path. We provide a number of findings. First, in a decentralized economy growth or labor (or both) are greater than in the regime with a fully informed planner, and hence are sub-optimal from a welfare standpoint. Second, a myopic intervention which overlooks consumption and leisure externalities leads to more growth and labor than in both the decentralized and the fully informed regime. Third, we provide a case for happy degrowth: a transition to the optimal balanced growth path that is associated with downscaling of production, a reduction in private consumption, and an ongoing increase in leisure and well-being.
|Autori:||BILANCINI E; D'ALESSANDRO S|
|Titolo:||Long run Welfare under Externalities in Consumption, Leisure, and Production: A Case for Happy De-Growth vs. Unhappy Growth|
|Anno del prodotto:||2012|
|Digital Object Identifier (DOI):||10.1016/j.ecolecon.2011.10.023|
|Appare nelle tipologie:||1.1 Articolo in rivista|