Control of environmental pollution and economic growth: Modelling and numerical solution

In this paper, a dynamic model which describes the relationship between environmental pollution and economic growth is presented. On the basis of the model, an optimal trade-off between pollution and consumption is discussed for the economy which is on a balanced growth path. Then the investment policy is studied which leads the economy to the desired balanced growth path as soon as possible, under the constraint that the pollution level never exceeds a specified allowable level. Some results of numerical computation are also given.