CD production function - impact of environmental regulations

CFA Level III
#1

So if new regulations are enacted which translate in to a one time cost for an industry does that affect growth in total factor productivity or growth in the capital stock?

My initial reaction would be that it would lead to increased costs which reduce the available funds to invest in capital stock.

What if new machinery had to be purchased to abide with new regulations. That would be an increase in the capital stock but wouldn’t that actually increase fixed costs and decrease GDP growth in the near term?

#2

In the long term, the environmental/pollution controls will incur extra cost, which may reduce capital growth. TFP could be affected, too.

#3

CD gives a long term growth rate of GDP.

So a one-time change , unless sustained at the new level , would not be considered as significant, because it would revert to the long term average

#4

So one time costs would decrease productivity and GDP growth in the short run but not affect output growth in the long run?