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Global Indeterminacy in a Tourism Sector Model

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  • OA. Carboni
  • P. Russu

Abstract

This article develops a dynamic optimising macro model of a open economy specialised in tourism based on natural resources. Environmental externalities are explicitly introduced in the production function. Global dynamic analysis shows that, under some conditions on the parameters, if the initial values of the state variables are close enough to the coordinates of Pa, then there exists a continuum of equilibrium trajectories approaching Pa and one trajectory approaching Pb. Therefore, the model exhibits global indeterminacy, since either Pa or Pb can be selected according to agent expectations.

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Bibliographic Info

Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 201230.

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Date of creation: 2012
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Handle: RePEc:cns:cnscwp:201230

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Related research

Keywords: global and local indeterminacy; environmental externalities; history versus expectations; hopf bifurcation;

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  1. Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2005. "Consumption of private goods as substitutes for environmental goods in an economic growth model," MPRA Paper 13664, University Library of Munich, Germany.
  2. Matsuyama, Kiminori, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 617-50, May.
  3. Eliasson, Ludvik & Turnovsky, Stephen J., 2004. "Renewable resources in an endogenously growing economy: balanced growth and transitional dynamics," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1018-1049, November.
  4. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Working Papers 0025, University of Washington, Department of Economics.
  5. Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2011. "Poverty trap and global indeterminacy in a growth model with open-access natural resources," Journal of Economic Theory, Elsevier, vol. 146(2), pages 569-591, March.
  6. Krugman, Paul, 1991. "History versus Expectations," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 651-67, May.
  7. Gardner M. Brown, 2000. "Renewable Natural Resource Management and Use without Markets," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 875-914, December.
  8. Damania, Richard & Hatch, John, 2005. "Protecting Eden: markets or government?," Ecological Economics, Elsevier, vol. 53(3), pages 339-351, May.
  9. Angelo Antoci & Marcello Galeotti & Paolo Russu, 2012. "Global Analysis and Indeterminacy in a Two-sector Growth Model with Human Capital," Working Papers - Economics wp2012_14.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  10. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Discussion Papers in Economics at the University of Washington 0025, Department of Economics at the University of Washington.
  11. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
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