Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098768 | Journal of Economic Dynamics and Control | 2011 | 11 Pages |
Abstract
This paper examines an equilibrium growth model in which production activities generate environmental pollution that has a negative welfare effect and in which individual households' subjective discount rate is a function of individual consumption, which is internal to each household, and of total pollution, which is an external factor to the individual agents. It is shown that there may exist multiple steady states and that the dynamic equilibrium may display indeterminacy, depending on the properties of the discount-rate function, the pollution-capital relationship in production technology, and the pollution-consumption relationship in instantaneous utility. The long-run effects of tighter environmental policy are subsequently examined, and the results are also found to be dependent on the above factors.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Akihiko Yanase,