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Integrating Debt Dynamics and Planetary Boundaries Through a Catastrophe Theory Model of Financial Ecological Collapse

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  • Sharma Ashutosh

    (Fisher College, Boston, Massachusetts, United States of America)

Abstract

This paper develops a novel nonlinear dynamical system to analyze the interaction between financial instability and ecological overshoot. Using catastrophe theory and bifurcation analysis, I demonstrate how accelerating debt growth and environmental degradation create hysteresis loops, leading to irreversible economic collapse. This study introduces the first catastrophe theory framework unifying Minsky’s financial instability and planetary boundaries, identifying dual critical thresholds in debt/GDP ratios (ϕ>0.07) and carbon budgets (ϵ > 0.12) that trigger irreversible collapse.

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Handle: RePEc:vrs:wsbjbf:v:59:y:2025:i:1:p:71-80:n:1006
DOI: 10.2478/wsbjbf-2025-0006
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References listed on IDEAS

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  1. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
  2. repec:rnp:ecopol:09111 is not listed on IDEAS
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