External increasing returns, short-lived agents and long-lived waste

Rowena Pecchenino, David Schimmelpfennig () and Stacey Schreft

No 91-02, Working Paper from Federal Reserve Bank of Richmond

Abstract: Actions that affect environmental quality both influence and respond to macroeconomic variables. Further, many environmental and macroeconomic consequences of current actions will have uncompensated effects that outlive the actors. This paper presents an overlapping-generations model of environmental externalities and capital accumulation: consumption of the old generates long-lived garbage as a by-product, while young agents invest in both capital and destruction of the existing garbage stock. The model also assumes external increasing returns: increases in the capital stock increase the future productivity of capital. In the model, increases in the natural rate of degradation do, and improvements in society's ability to dispose of garbage may, encourage capital accumulation. Multiple Pareto-ranked equilibria can arise as a consequence of the interaction between garbage and capital accumulation. Underaccumulation of garbage, analogous to dynamically inefficient overaccumulation of capital, can arise in the model.

Keywords: Capital; Natural resources (search for similar items in EconPapers)
Date: 1990
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.richmondfed.org/publications/research/working_papers/1991/wp_91-2.cfm (text/html)
https://www.richmondfed.org/-/media/RichmondFedOrg ... /1991/pdf/wp91-2.pdf Full text (application/pdf)

Related works:
Working Paper: External Increasing Returns, Short-Lived Agents and Long- Lived Waste (1990)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedrwp:91-02

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().