The Role Of Higher Education Institutions In Sustainable Development: A Dsge Analysis

Economic theory on sustainable development mainly focuses on the incentives to reduce Greenhouse Gases (GHGs) emissions, but it is very important to analyze the processes of the definition of preferences of individuals and households to define a real change. In opposition to a large managerial and organizational literature on this topic, economic analysis has few contributions. In order to fill this gap in the literature, this paper extends previous studies applying environmental DSGE models, embedding human capital accumulation, environmental variables, and households' environmental awareness. Our results can be summarized as follows. First, enrollment in tertiary education and environmental awareness are procyclical. Second, households become more sensitive to environmental issues during a positive technology shock. Finally, higher academic institutions play a key role in reinforcing the above mechanism, allowing sustainable development. This paper explores the role of higher education institutions in achieving sustainable development, employing a Dynamic Stochastic General Equilibrium (DSGE) model extended to consider the European Union (EU) educational system and households' environmental awareness. In particular, this paper addresses the following fundamental questions:(i) how HEIs productivity affect households' environmental awareness?(ii) how human capital and environmental awareness interact with the business cycle?