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Recycling waste and endogenous fluctuations in an OLG model
Author(s) -
Fodha Mouez,
Magris Francesco
Publication year - 2015
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12073
Subject(s) - economics , overlapping generations model , consumption (sociology) , microeconomics , endogenous growth theory , profit (economics) , hopf bifurcation , econometrics , bifurcation , market economy , social science , physics , nonlinear system , quantum mechanics , sociology , human capital
We study an overlapping generations model composed of two productive sectors: the first produces a virgin good and the second recycles a good from a previous period. When the profit of the recycling sector is in its increasing region, endogenous fluctuations emerge through a flip bifurcation when leisure and consumption are complementary. Conversely, when profit is in its decreasing region, deterministic cycles emerge also under the gross substitutability assumption. The steady state becomes indeterminate through a flip or a Hopf bifurcation, provided leisure and consumption are complements. We also study the social optimum and the altruistic market economy.