In this paper we use a modified Ramsey-Cass-Koopmans model to show that the inverse U-shaped income-pollution relationship may be explained through the declining behavior of the interest rate over time and as income grows. If the problem of the benevolent planner is to implement an environmental...

The uncovered interest rate parity condition lies at the heart of the "impossible trinity", stating that the three objectives of fixed exchange rates, free capital flows, and independent monetary policy cannot be pursued simultaneously. We argue that although monetary unification does indeed...