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SaddleS and BifurcationS in an Overlapping GenerationS Economy with a Renewable Resource

Author

Listed:
  • Erkki Koskela

    (Department of Economics, University of Helsinki, Finland)

  • Markku Ollikainen

    (Department of Economics, University of Helsinki, Finland)

  • Mikko Puhakka

    (Department of Economics, University of Oulu, Finland)

Abstract

We incorporate a renewable resource as a factor of production and store of value into an overlapping generations model. We characterize dynamics and stability of steady state equilibria by introducing the concave resource growth function. The nature of equilibria in the presence of ‘well-behaved’ resource stock growth depends on the size of the intertemporal elasticity of substitution in consumption. If it is at least half, but not exactly one, steady states are saddle points. For intertemporal elasticity less than one half we use a parametric example with logistic growth to demonstrate the existence of stable equilibria (indeterminacy) and a subcritical bifurcation.

Suggested Citation

  • Erkki Koskela & Markku Ollikainen & Mikko Puhakka, 2008. "SaddleS and BifurcationS in an Overlapping GenerationS Economy with a Renewable Resource," Finnish Economic Papers, Finnish Economic Association, vol. 21(1), pages 3-21, Spring.
    • Handle: RePEc:fep:journl:v:21:y:2008:i:1:p:3-21
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    References listed on IDEAS

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    3. Koskela, Erkki & Ollikainen, Markku & Puhakka, Mikko, 2002. "Renewable Resources in an Overlapping Generations Economy Without Capital," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 497-517, May.
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    Cited by:

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    2. David Desmarchelier & Alexandre Mayol, 2022. "To seed, or not to seed? An endogenous labor supply approach in a simple overlapping generation economy," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 25-38, January.
    3. David DESMARCHELIER & Alexandre MAYOL, 2020. "To seed, or not to seed," Working Papers of BETA 2020-04, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Gregory Amacher & Markku Ollikainen & Mikko Puhakka, 2018. "Renewable Resource Use and Nonseparable Amenity Benefits," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(4), pages 637-659, April.

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    More about this item

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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