Pollution Effects on Public Capital and Social Capital Accumulation

Estelle Campenet

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

Abstract: The interactions between the accumulation of public capital, the formation and environmental degradation are largely unexplored in the literature on growth. Each of these dimensions has recieved considerable attention in isolation, but no existing model treats them a state variables evolving jointly within a unified intertemporal framework. This paper fills this gap by developing a theoretical model, in which public capital, social capital and a stock of pollution accumulate simultaneously beside private capital. Social capital formation is endogenised via a meeting opportunity parameter linked to the availability of public infrastructure, whilst pollution appears as a by-product of productive activity, without entering into household utility. Firstly, the model admits a unique internal steady state. Secondly, a Hopf bifurcation occurs near this state, allowing the rise of a stable limit cycle and ensuring that the economy converges towards a regime of persistent endogenous oscillations. These results are established analytically and confirmed by numerical simulations.

Keywords: Social Capital; Public Capital; Hopf Bifurcation; Endogenous Depreciation (search for similar items in EconPapers)
JEL-codes: C62 H41 O41 Q58 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-dge and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2026-35

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