Can Economic Activities Lead to Climate Chaos? An Economic Analysis on Global Warming

Zhiqi Chen

Canadian Journal of Economics, 1997, vol. 30, issue 2, 349-66

Abstract: This paper presents a two-sector dynamic general equilibrium model in which the productivity of the agricultural sector depends on the atmospheric temperature, which in turn is influenced by the activities of the manufacturing sector. The equilibrium time paths of the world economy and temperature depend on the rate at which the Earth sheds heat. If this decay is too small, the dynamic interaction between the climate system and the market mechanism, both of which are stable in isolation, may lead to cycles or even chaos. Furthermore, economic growth may push the world economy and temperature from a stable stead state into a cyclical or chaotic time path.

Date: 1997
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