A Theory of Endogenous Degrowth and Environmental Sustainability

First version: May 2024. Earlier version: CEPR DP 20007, March 2025. We thank Zhang Chen, Maarten De Ridder, David Hemous, Peter Klenow, Morten Olsen, Kjetil Storesletten, Chris Tonetti, and audiences at the Conference on the Economics of Innovation in Memory of Zvi Griliches, the SED, and seminars at the Chinese University of Hong Kong, Danmarks Nationalbank, EIEF, London Business School, LSE, Swiss National Bank, University of Copenhagen, University of Lausanne, University of Oslo, University of St. Gallen, the Geneva Graduate Institute, and University of Zurich for helpful comments. We are grateful to Lorenzo Caliendo and Matthew Murillo for assistance with the GTAP data. Nicolas Fajardo and Youdan Zhang provided outstanding research assistance. Aghion thanks the SCOR Foundation for Science for financial support; Peters and Zilibotti thank the Tobin Center for financial support. For generous hospitality, Zilibotti thanks the University of Copenhagen and Danmarks Nationalbank, while Peters thanks the University of Zurich. Financial support from the SCOR Foundation, Paris. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.