Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

In this study, we build six models which are based on different assumptions in production function and try to decompose economic growth by production factors. The first five production function models are differentiated according to the assumption of endogeneity in traditional production factors. And the last model considers the case that an economy pays for carbon emission. The empirical results based on the first five models provide that it is necessary for us to maintain the growth rate of TFP for expanding an economic growth potential. Also, the empirical results imply that an economy should figure out and resolve the systematic problems for increasing investment and job creation. From the empirics in the last model, in case that an environmental regulation is imposed, then the growth rate of green TFP will be lower than the growth rate of a traditional TFP. In fact, the introduction of green regulations is possible to induce an improvement in a green technology. On the other hand, a green regulation might be lower the competitiveness of our economy, transitionally. It is hereby recommended to enhance a green technology prior to an allover introduction of green regulation.