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This paper analyzes an impact of introducing the Kyoto protocols on the economic growth in a small economy (illustrated on the case of Polish economy). The analysis is performed using a simple one sector macroeconomic model, which includes economic as well as environmental factors. The endogenization of the environmental costs causes extra charges or benefits related to the trade in the emission permits. The model being considered constitutes a part of a finite horizon optimization problem with the zero end-point constraints on the net import and foreign debt, which are related to the assumed finite time horizon of economic adjustment. The optimal solution determines the optimal structure of investments in two competing technologies. Two simulation scenarios were performed, which differed in the level of permit prices, used as the model parameters.
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Projects co-financed by:
Operational Program Digital Poland, 2014-2020, Measure 2.3: Digital accessibility and usefulness of public sector information; funds from the European Regional Development Fund and national co-financing from the state budget.