| Title | Poverty trap and global indeterminacy in a growth model with open-access natural resources |
|---|---|
| ID_Doc | 77711 |
| Authors | Antoci, A; Galeotti, M; Russu, P |
| Title | Poverty trap and global indeterminacy in a growth model with open-access natural resources |
| Year | 2011 |
| Published | Journal Of Economic Theory, 146, 2 |
| Abstract | In this paper we use global analysis techniques to analyze an economic growth model with environmental negative externalities, giving rise to a three-dimensional dynamic system (the framework is the one introduced by Wirl (1997) [53]). The dynamics of our model admits a locally attracting stationary state P-1*, which is, in fact, a poverty trap, coexisting with another stationary state P-2* possessing saddle-point stability. Global dynamical analysis shows that, under some conditions on the parameters, if the initial values of the state variables are close enough to the coordinates of P-1*, then there exists a continuum of equilibrium trajectories approaching P-1* and one trajectory approaching P-2*. Therefore, our model exhibits global indeterminacy, since either P-1* or P-2* can be selected according to agent expectations. Moreover, we prove that conditions guaranteeing the attractivity of P-1* also imply the saddle-point stability of P-2*. However, when P-1* is not attractive, numerical simulations show the possible existence of one or two limit cycles: an attractive one surrounding P-1* and one endowed with a two-dimensional stable manifold surrounding P-2*. (C) 2010 Elsevier Inc. All rights reserved. |
| https://flore.unifi.it/bitstream/2158/396445/1/Poverty%20trap.pdf |
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