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Environmental sustainability, nonlinear dynamics and chaos reloaded: 0 matters!

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  • Andrea Caravaggio
  • Mauro Sodini

Abstract

In this paper, we reconsider the overlapping generations (OLG) environmental model introduced in John and Pecchenino (1994) and Zhang (1999) by adopting the specification of the environmental dynamics proposed by Naimzada and Sodini (2010). The model two different regimes that may alternate: one in which the economy and the environment co-evolve in the same direction; the other in which the environmental problem is not internalized by the agents, that is, the agents do not devolve any private resource to the environmental good, leading to a possible trade-off between environment and economic growth. The analysis of the equilibrium dynamics, described by a two dimensional piecewise smooth map, shows that starting from a parametric configuration in which the dynamics are definitely driven by a unique regime, the increase of the negative effect of the agents' consumption activity ends up in scenarios where the two regimes alternate, determining the arise of stable cycles or the occurrence of chaotic regimes. It is interesting to notice that because of the nonsmoothness of the map, the rise in environmental harm produced by economic activity may induce a sudden transition to chaotic regime.

Suggested Citation

  • Andrea Caravaggio & Mauro Sodini, 2022. "Environmental sustainability, nonlinear dynamics and chaos reloaded: 0 matters!," Discussion Papers 2022/287, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2022/287
    Note: ISSN 2039-1854
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    File URL: https://www.ec.unipi.it/documents/Ricerca/papers/2022-287.pdf
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    More about this item

    Keywords

    Bifurcations; Complex Dynamics; Overlapping Generations; Sustainability;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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