 Pollution effects on disease transmission and economic stabilityStefano Bosi and David Desmarchelier International Journal of Economic Theory, 2021, vol. 17, issue 2, 169-189 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 eco‐friendly 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 destabilization of the economy and promotion of the intergenerational inequalities. Date: 2021 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:17:y:2021:i:2:p:169-189 Ordering information: This journal article can be ordered from Access Statistics for this article International Journal of Economic Theory is currently edited by Kazuo Nishimura and Makoto Yano More articles in International Journal of Economic Theory from The International Society for Economic Theory |
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