Pollution effects on disease transmission and economic stability

Stefano Bosi and David Desmarchelier

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: In this article, we embed a model of disease spread into a Ramsey model. A stock of pollution, viewed as a productive externality, affects both the disease transmission and the consumption demand. An ecofriendly government levies a proportional Pigouvian tax on production to depollute. We show the coexistence of two steady states in the long run: a disease-free and an endemic steady state. At the endemic steady state, a higher green-tax rate always reduces the pollution level. In the short run, we show the existence of limit cycles (through a Hopf bifurcation) as well as more complex dynamics of codimension two (a Gavrilov-Guckenheimer bifurcation). We complete the study with a numerical illustration of these bifurcations and a new facet of the Green Paradox: a higher tax rate can allow more scope for cycles by lowering the critical aversion to pollution and, thus, contribute to destabilize the economy and promote intergenerational inequalities.

Keywords: SIS model; Ramsey model; pollution; transcritical bifurcation; Hopf bifurcation; Gavrilov-Guckenheimer bifurcation. (search for similar items in EconPapers)
JEL-codes: C61 E32 O44 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ene, nep-env, nep-hea and nep-mac
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Pollution effects on disease transmission and economic stability (2021)
Working Paper: Pollution effects on disease transmission and economic stability (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2018-11

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