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Taste for nature and long-run cycles

Author

Listed:
  • Stefano BOSI
  • David DESMARCHELIER
  • Thai HA-HUY
Abstract
From a dynamic perspective, the existing literature on renewable resources in a Ramsey economy is puzzling. On the one hand, the central plannerís solution leads to the occurrence of limit cycles around the lower steady state (Wirl, 2004); on the other hand, limit cycles arise in a market economy around the higher steady state (Bosi and Desmarchelier, 2018). To reconcile these Öndings, we study the competitive equilibrium of a discrete-time Ramsey-Cass-Koopmans model with a renewable resource, where preferences are represented by two di§erent utility functions with Constant Static Elasticity of Substitution (CSES) and Constant Intertemporal Elasticity of Substitution (CIES). In the CSES case, we recover the dynamics highlighted by Wirl (2004), while, in the CIES case, the ones obtained by Bosi and Desmarchelier (2018). Moreover, this conclusion is robust under two alternative regeneration processes for the resource (power and logistic laws). In other words, the dynamics seems to depend more on the preference structure than on the market structure (central planner versus market economy).

Suggested Citation

  • Stefano BOSI & David DESMARCHELIER & Thai HA-HUY, 2024. "Taste for nature and long-run cycles," Working Papers of BETA 2024-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2024-23
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    File URL: http://beta.u-strasbg.fr/WP/2024/2024-23.pdf
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    References listed on IDEAS

    as
    1. Ayong Le Kama, Alain D., 2001. "Sustainable growth, renewable resources and pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1911-1918, December.
    2. Stefano Bosi & David Desmarchelier, 2018. "Limit Cycles Under a Negative Effect of Pollution on Consumption Demand: The Role of an Environmental Kuznets Curve," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(2), pages 343-363, February.
    3. Sandifer, Paul A. & Sutton-Grier, Ariana E. & Ward, Bethney P., 2015. "Exploring connections among nature, biodiversity, ecosystem services, and human health and well-being: Opportunities to enhance health and biodiversity conservation," Ecosystem Services, Elsevier, vol. 12(C), pages 1-15.
    4. Bosi, Stefano & Desmarchelier, David, 2018. "Natural cycles and pollution," Mathematical Social Sciences, Elsevier, vol. 96(C), pages 10-20.
    5. Wirl, Franz, 2004. "Sustainable growth, renewable resources and pollution: Thresholds and cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1149-1157, March.
    6. Partha Dasgupta & Geoffrey Heal, 1974. "The Optimal Depletion of Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 3-28.
    7. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1994. "The environment and the long run: A comparison of different criteria," MPRA Paper 7907, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Ramsey model; reproduction law; pollution; two-period and limit cycles.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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