This paper analyzes an intertemporal optimization problem in which agents derive utility from three goods: leisure, a public environmental good and the consumption of a produced good. The global analysis of the dynamic system generated by the optimization problem shows that global indeterminacy may arise: given the initial values of the state variables, the economy may converge to different steady states, by choosing different initial values of the control variable.
Environmental degradation and indeterminacy of equilibrium selection / Antoci, A.; Galeotti, M.; Sodini, M.. - In: DISCRETE AND CONTINUOUS DYNAMICAL SYSTEMS. SERIES B.. - ISSN 1531-3492. - 26:11(2021), pp. 5755-5767. [10.3934/DCDSB.2021179]
Environmental degradation and indeterminacy of equilibrium selection
Sodini M.
2021
Abstract
This paper analyzes an intertemporal optimization problem in which agents derive utility from three goods: leisure, a public environmental good and the consumption of a produced good. The global analysis of the dynamic system generated by the optimization problem shows that global indeterminacy may arise: given the initial values of the state variables, the economy may converge to different steady states, by choosing different initial values of the control variable.| File | Dimensione | Formato | |
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