Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

We analyze an overlapping generations model where agent’s welfare depends on three goods: leisure, environmental quality and consumption of a private good. We assume that the production process of the private good depletes the natural resource and that the consumption of the private good alleviates the damages due to environmental deterioration. In such context, we show that individuals’ reactions to environmental deterioration may lead to complex dynamics, in particular to the rise of periodic orbits and chaos.

[1]  Andrew John,et al.  An Overlapping Generations Model of Growth and the Environment , 1994 .

[2]  Philippe Michel,et al.  A Theory of Economic Growth: Dynamics and Policy in Overlapping Generations , 2002 .

[3]  A Escofet,et al.  Overcoming environmental deterioration through defensive expenditures: field evidence from Bahía del Tóbari (Sonora, México) and implications for coastal impact assessment. , 2007, Journal of environmental management.

[4]  J. Barkley Rosser,et al.  CONSISTENT EXPECTATIONS EQUILIBRIA AND COMPLEX DYNAMICS IN RENEWABLE RESOURCE MARKETS , 2001, Macroeconomic Dynamics.

[5]  P. Pintus,et al.  Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production , 1998 .

[6]  Stacey L. Schreft,et al.  Short-lived agents and the long-lived environment , 1995 .

[7]  S. Bartolini,et al.  Negative externalities as the engine of growth in an evolutionary context , 1999 .

[8]  Wei-Bin Zhang,et al.  Change of economic structure—Capital, knowledge, population and pollution , 1996 .

[9]  U. Simonis,et al.  Environmental damage — environmental expenditure 2: Statistical evidence on the Federal Republic of Germany , 1991 .

[10]  J. Grandmont,et al.  Capital-labor substitution and competitive non-linear endogenous business cycles , 1998 .

[11]  Angelo Antoci,et al.  Negative externalities, defensive expenditures and labour supply in an evolutionary context , 2004 .

[12]  Stefano Bartolini,et al.  Undesirable growth in a model with capital accumulation and environmental assets , 2002, Environment and Development Economics.

[13]  A. Antoci,et al.  Should we replace the environment? Limits of economic growth in the presence of self‐protective choices , 2008 .

[14]  Angelo Antoci,et al.  Consumption of private goods as substitutes for environmental goods in an economic growth model , 2005 .

[15]  Angelo Antoci.  Environmental degradation as engine of undesirable economic growth via self-protection consumption choices , 2009 .

[16]  Angelo Antoci,et al.  Undesirable economic growth via agents' self-protection against environmental degradation , 2007, J. Frankl. Inst..

[17]  Pietro Reichlin,et al.  Equilibrium cycles in an overlapping generations economy with production , 1986 .

[18]  Stefano Bartolini,et al.  Environmental and social degradation as the engine of economic growth , 2002 .

[19]  A. Antoci,et al.  Environmental defensive expenditures, expectations and growth , 2005 .

[20]  Thomas D. Crocker,et al.  Cooperative and noncooperative protection against transferable and filterable externalities , 1991 .

[21]  J. Barkley Rosser,et al.  Complex Ecologic-Economic Dynamics and Environmental Policy , 2001 .

[22]  Gian Italo Bischi,et al.  Harvesting dynamics in protected and unprotected areas , 2007 .

[23]  R. Hueting,et al.  New scarcity and economic growth: More welfare through less production? , 1980 .

[24]  Ric D. Herbert,et al.  Economic and environmental impacts of pollution control in a system of environment and economic interdependence , 2002 .

[25]  U. Simonis,et al.  Environmental Damage — Environmental Expenditures: , 1988 .

[26]  Guido Cazzavillan,et al.  Indeterminacy and Endogenous Fluctuations with Arbitrarily Small Externalities , 2001, J. Econ. Theory.

[27]  J. B. Rosser.  Complex ecologic-economic dynamics and environmental policy , 2001 .

[28]  Allison Woodruff,et al.  Environmental Sustainability , 2009, IEEE Pervasive Computing.

[29]  G. Duranton.  Endogenous labor supply, growth and overlapping generations , 2001 .

[30]  C. Leipert,et al.  National Income and Economic Growth: The Conceptual Side of Defensive Expenditures , 1989 .

[31]  Junxi Zhang,et al.  Environmental sustainability, nonlinear dynamics and chaos , 1999 .

[32]  P. Bird.  The transferability and depletability of externalities , 1987 .

[33]  F. Lamantia.  Variable effort management of renewable natural resources , 2006 .