Environmental shocks and sustainability in a basic economy-environment model

Privileggi, Fabio, and Marsiglio, Simone (2013) Environmental shocks and sustainability in a basic economy-environment model. International Journal of Applied Nonlinear Science, 1 (1). pp. 67-75.

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We study a stochastic, discrete-time, economy-environment integrated model, where human activity affects the evolution of pollution over time. We assume that exogenous i.i.d. environmental shocks determine the rate of pollution transfer. We show that the pollution to capital ratio dynamics can be read as an iterated function system converging to an invariant distribution supported on a (asymmetric) Cantor set, and that human intervention aiming at offsetting the environmental impact of economic activities is needed to ensure sustainability.

Item ID: 25896
Item Type: Article (Research - C1)
ISSN: 1752-2870
Keywords: iterated function systems; IFS; Cantor set; environmental shocks; economy-environment model; sustainability; environmental pollution; pollution to capital ratio dynamics; invariant distribution; environmental impact; economic activities; sustainable development
Date Deposited: 25 Mar 2013 04:20
FoR Codes: 14 ECONOMICS > 1401 Economic Theory > 140103 Mathematical Economics @ 40%
14 ECONOMICS > 1402 Applied Economics > 140205 Environment and Resource Economics @ 20%
14 ECONOMICS > 1402 Applied Economics > 140202 Economic Development and Growth @ 40%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9101 Macroeconomics > 910103 Economic Growth @ 40%
96 ENVIRONMENT > 9699 Other Environment > 969999 Environment not elsewhere classified @ 20%
97 EXPANDING KNOWLEDGE > 970114 Expanding Knowledge in Economics @ 40%
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