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Global Indeterminacy in a Tourism Sector Model

Author

Listed:
  • OA Carboni
  • P. Russu
Abstract
This article develops a dynamic optimising macro model of a open economy specialised in tourism based on natural resources. Environmental externalities are explicitly introduced in the production function. Global dynamic analysis shows that, under some conditions on the parameters, if the initial values of the state variables are close enough to the coordinates of Pa, then there exists a continuum of equilibrium trajectories approaching Pa and one trajectory approaching Pb. Therefore, the model exhibits global indeterminacy, since either Pa or Pb can be selected according to agent expectations.

Suggested Citation

  • OA Carboni & P. Russu, 2012. "Global Indeterminacy in a Tourism Sector Model," Working Paper CRENoS 201230, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    • Handle: RePEc:cns:cnscwp:201230
    as

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    File URL: https://crenos.unica.it/crenos/node/3824
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    File URL: https://crenos.unica.it/crenos/sites/default/files/WP12-30.pdf
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    References listed on IDEAS

    as
    1. Eliasson, Ludvik & Turnovsky, Stephen J., 2004. "Renewable resources in an endogenously growing economy: balanced growth and transitional dynamics," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1018-1049, November.
    2. Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2011. "Poverty trap and global indeterminacy in a growth model with open-access natural resources," Journal of Economic Theory, Elsevier, vol. 146(2), pages 569-591, March.
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    5. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," Chaos, Solitons & Fractals, Elsevier, vol. 42(3), pages 1439-1450.
    6. Carboni, Oliviero A. & Russu, Paolo, 2013. "Linear production function, externalities and indeterminacy in a capital-resource growth model," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 422-428.
    7. Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2005. "Consumption of private goods as substitutes for environmental goods in an economic growth model," MPRA Paper 13664, University Library of Munich, Germany.
    8. Angelo Antoci & Marcello Galeotti & Paolo Russu, 2014. "Global analysis and indeterminacy in a two-sector growth model with human capital," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(4), pages 313-338, December.
    9. Damania, Richard & Hatch, John, 2005. "Protecting Eden: markets or government?," Ecological Economics, Elsevier, vol. 53(3), pages 339-351, May.
    10. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Discussion Papers in Economics at the University of Washington 0025, Department of Economics at the University of Washington.
    11. Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 651-667.
    12. Gardner M. Brown, 2000. "Renewable Natural Resource Management and Use without Markets," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 875-914, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    global and local indeterminacy; environmental externalities; history versus expectations; hopf bifurcation;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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