Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production

Cazzavillan, Guido; Lloyd‐Braga, Teresa; Pintus, Patrick

doi:10.1006/jeth.1997.2384

Cited by 87 publications

(99 citation statements)

References 31 publications

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“…These are quite new results because the widespread view in literature on overlapping generations models is that the rise of periodic orbits and of indeterminacy is due to distortions in the production side of the economy: non perfect competition, positive externalities and so on (see e.g. Reichlin 1986;Grandmont et al 1998;Cazzavillan et al 1998;Cazzavillan 2001), while in our model these dynamic regimes can be observed assuming a very simple production technology (i.e. a Cobb-Douglas one) and perfect competition among firms.…”

Section: Introductionmentioning

confidence: 70%

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

Antoci

Sodini

2009

Chaos, Solitons & Fractals

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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.

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Section: Introductionmentioning

confidence: 70%

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

Antoci

Sodini

2009

Chaos, Solitons & Fractals

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“…where B > 0 is a scaling parameter [22]. To have a good quality of environment in old age, a representative young consumer invests a portion of her income, d t , in pollution abatement.…”

Section: The Basic Pollution Stock Modelmentioning

confidence: 99%

Complex Dynamics Induced by Nonlinear Pollution Absorption, Pollution Emission Rate and Effectiveness of Abatement Technology in an OLG Model

Dong

Wang

2017

Sustainability

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Abstract:In this work, nonlinear pollution absorption, emission rate, and effectiveness of abatement technology are incorporated into the classic overlapping generation model. Within this framework, we analyze the macroeconomic effects of pollution emission and abatement technology on the economy. Our findings reveal that different levels of pollution emission rates from per capita income and the effectiveness of abatement technology could induce complex dynamical behavior, including the occurrence of a stable equilibrium, cycles, and chaos. Our analysis shows that either the pollution emission rate per capita income should be controlled to be small enough or the effectiveness of abatement technology should be large enough to maintain a stable system yielding high level of per capita income. A high level of pollution emission rate per capita income and a low level of effectiveness of abatement technology can lead to a stable economy, but with a low level of per capita income. In the case that the pollution emission rate and the effectiveness of abatement technology vary in a certain range, the economy would become unstable, and cycles and chaos would emerge.

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“…For example, in the cases of productive externalities, imperfect competition in the product market or with consumption, labor or capital taxation, the real interest rate and/or the real wage relevant to consumers' decisions are no longer equal to the marginal productivities of capital and labor at the firm level. Also in the case of consumption or public spending externalities on preferences the relevant intertemporal choice of workers becomes a trade-off between future effective consumption 8 , Ω t+1 L t+1, (that no longer coincides with the wage bill) and leisure. Moreover, in the presence of some labor market imperfections, such as efficiency wages or unions, or with leisure externalities, the private offer curve derived for the perfectly competitive economy is no longer valid at the social level, where the relevant concept is the generalized offer curve Γ.…”

Section: The Modelmentioning

confidence: 99%

Market distortions and local indeterminacy: A general approach

Lloyd‐Braga

Modesto

Seegmuller

2014

Journal of Economic Theory

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We provide a general methodology to study the role of market distortions on local indeterminacy and bifurcations. We extend the well-known Woodford (1986) model to account for market distortions, introducing general specifications for three crucial functions: the real interest rate, the real wage and the workers' offer curve. The elasticities of these three functions play a key role on local dynamics and allow us to identify which types of distortions are the most powerful for indeterminacy.Most of the specific market imperfections considered in the related literature are particular cases of our general framework. Comparing them we obtain several equivalence results in terms of indeterminacy mechanisms. We also provide examples of distortions that illustrate new results. Furthermore we show that, for an elasticity of substitution between inputs around unity, indeterminacy requires a minimal degree of distortions. However, the degree of labor market distortions compatible with that requirement is empirically plausible.JEL classification: C62, E32.

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Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production

Abstract: The authors would like to thank very much Jean-Michel Grandmont for valuable comments and suggestions, and for bis constant encouragement. Special grateful thanks to Robin G. de Vilder and Duncan J. Sands for enlightening remarks on our work and for helping with the computer work.

Cited by 87 publications

References 31 publications

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

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

Complex Dynamics Induced by Nonlinear Pollution Absorption, Pollution Emission Rate and Effectiveness of Abatement Technology in an OLG Model

Market distortions and local indeterminacy: A general approach

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