Publications

What factors shape the environmental sustainability of economic growth? This paper shows that the shift in advanced economies from quantity to quality growth (i.e., from producing more units of identical goods to producing more valuable varieties) is a potentially important mechanism favoring the decoupling of economic growth from resource use and environmental impacts. First, the paper introduces a parsimonious and tractable model that distinguishes the environmental impacts of quantity and quality growth and identifies the key parameter to be estimated empirically. Second, to estimate the quality elasticity of the environmental impacts, the paper uses the US automobile industry as an important and illustrative case. The environmental impact of quality growth is found to be significantly smaller than the impact of quantity growth. Accounting for the distinct impacts of quantity and quality growth would help improve sustainability projections and policies.