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Economic growth with brown or green capital

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  • Bosi, Stefano
  • Le Van, Cuong
  • Phung, Giang

Abstract

We study a discrete-time growth model where capital affects the productivity of other firms and can therefore be “brown” or “green”. Brown inputs, decreasing productivity, are a negative externality, while green inputs, whether human or natural, increasing productivity, are a positive externality. We prove the existence of self-consistent externalities before the existence of a competitive equilibrium, and the occurrence of two-period cycles through bifurcation analysis. In particular, externalities lead to cycles: when negative, under dominant income effects; when positive, under dominant substitution effects.

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  • Bosi, Stefano & Le Van, Cuong & Phung, Giang, 2025. "Economic growth with brown or green capital," Journal of Mathematical Economics, Elsevier, vol. 117(C).
    • Handle: RePEc:eee:mateco:v:117:y:2025:i:c:s0304406825000187
    DOI: 10.1016/j.jmateco.2025.103101
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    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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