Indeterminacy and nonlinear dynamics in an OLG growth model with endogenous labour supply and inherited tastes

This study analyses the dynamics of a two-dimensional overlapping generations economy with endogenous labour supply à la Reichlin (1986) and aspirations, i.e. effective consumption by individuals of the current generation depends on the standard of living (based on consumption experience) of those that belong to the previous generation. We show that the relative importance of aspirations in utility is responsible for the existence of either one (normalised) steady state or two steady states. In particular, when the relative degree of aspiration is fairly high, the supply of labour becomes higher than those corresponding to the normalised steady state because individuals want to increase the amount of time spent at work when they are young in order to increase consumption possibilities when they are old, since the relative importance of past consumption is high in such a case. As regards local stability, the normalised steady state can be determinate or indeterminate and can undergo either a transcritical bifurcation or supercritical flip bifurcation depending on the intensity of the taste externality. Moreover, some interesting global dynamic properties emerge: indeed, when the relative importance of aspirations is strong enough, cyclical or quasi-cyclical behaviour and/or coexistence of attractors may occur. In particular, this last phenomena may cause global indeterminacy even if the stationary equilibria are locally determinate.Aspirations; Indeterminacy; Labour supply; OLG model; Nonlinear dynamics

Closed form solution for dynamic of sustainable tourism

The attention to environmental conditions of the planet drives many scientists to study and to analyze the externalities of the economic activities and their relapses on nature. The issue is quite complex because of the non-linear interactions between human and natural phenomena. Our intention is to study the particular case of tourist activities. Starting from the specification of the concept of sustainable development, using a simple model we characterize the conditions for which there exists an optimal equilibrium between nature and tourism. Then, trough several simulations we study which policies are able to guarantee the better synergies between economy and environmental quality.Policy, Sustainable Tourism

Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

We analyze an overlapping generations model where agent’s welfare depends on three goods: leisure, environmental quality and consumption of a private good. We assume that the production process of the private good depletes the natural resource and that the consumption of the private good alleviates the damages due to environmental deterioration. In such context, we show that individuals’ reactions to environmental deterioration may lead to complex dynamics, in particular to the rise of periodic orbits and chaos.Defensive environmental expenditures; overlapping generations models; indeterminacy; undesirable economic growth

An Evolutionary Analysis of Turnout With Conformist Citizens

We propose an evolutionary analysis of a voting game where citizens have a preference for conformism that adds to the instrumental preference for the electoral outcome. Multiple equilibria arise, and some generate high turnout. Simulations of best response dynamics show that high turnout is asymptotically stable if conformism matters but its likelihood depends on the reference group for conformism: high turnout is more likely when voters care about their own group's choice, as this better overrides the free rider problem of voting games. Comparative statics on the voting cost distribution, the population's size or the groups' composition are also done.Turnout, Turnout, coordination games, Poisson games, conformism, selection dynamics.

Pollution, fertility and public policies

This work extends the existing OLG literature on pollution to include endogenous fertility and endogenous mortality thus allowing the model to belong to the uniÖed growth theory narrative (Galor and Weil, 2000; Kalemli-Ozcan, 2002). With speciÖc regard to the theoretical analysis, we assume that individuals are not aware of the e§ects of their choices on environmental quality (Antoci et al., 2011, 2016). Environmental quality also a§ects individual mortality, which - as several empirical works pinpoint (see Ra¢ n and Seegmuller, 2014, and the literature cited therein) -, is strongly related to level of pollution. In this context, we analyse the role of public policies (financed at a balanced budget) on health and environmental quality. The main aim of the work is to analyse, on the one hand, the dynamics of the transition of the economy from a phase of underdevelopment to a phase of sustained development and, on the other hand, how public policies can favour the take o§ within an environmentally sustainable trajector

Living in an Uncertain World: Environment Substitution, Local and Global Indeterminacy

Environmental problems are increasingly frequent, intensive and unpredictable. To protect from the observed environmental depletion, economic agents increasingly react by substituting previously free public environmental goods with costly private goods. This substitution mechanism, however, can contribute to enhance the indeterminacy of the possible consequences of mankind activity, further increasing the uncertainty on the future environmental trajectories. To investigate this issue, the paper proposes an intertemporal optimization problem in which agents derive utility from three goods: leisure, a public environmental good and/or private consumption that can be used as a substitute for the environment. The analysis shows that the economy may end up being trapped in the Pareto-dominated steady state and that both local and global indeterminacy may arise in the model. No indeterminacy, however, emerges if green technologies are used so that production has no negative effects on the environment

Should I Stay or Should I Go? Carbon Leakage and ETS in an Evolutionary Model

Emissions trading is gaining increasing importance around the world as a suitable instrument to address climate change. In the absence of a global carbon market, however, unilateral carbon policies may end up causing carbon leakage effects, the more so if carbon prices are to increase in the future to achieve more ambitious emissions abatement targets. This paper intends to explore the possible delocalization effects of an Emissions Trading System (ETS) by proposing an evolutionary theoretical model in which regulated firms decide whether to stay (keep their production activities in the domestic country) or leave (move production abroad where no ETS is in place) imitating what other firms do. We investigate how this decision is affected by some key ETS design features, such as the emissions cap, the number of allowances granted for free to ETS firms, the level of a floor price for allowances. Numerical simulations show that the firms’ decision on whether to abate emissions or relocate abroad are more sensitive to policies that reduce the cost of green technologies than to changes in specific features of the ETS design such as the emissions cap, the floor price and the number of permits granted for free

Politics of consensus and compromise

What determines variations in legislative productivity? Why are some legislatures able to generate signiÖcant policy output while others appear mired in political gridlocks? Passing new laws is a defining task of governments and an important way in which elected offcials ináuence policy; asking what factors affect the size and quality of legislative output is therefore relevant for the study of democratic decision-making more broadly. In this paper, we investigate how coalition building in legislatures affects policy output. We model a divided legislature in which two parties -or factions- need to compromise in order to approve new laws. Each party decides whether to exert a high or a low e§ort in proposing a bill, and whether to accept or veto the proposal of the opponent party. Higher e§ort, while costly, translates in better bill proposal. Beyond the quality of legislation, parties care about votersípreferences. Such electoral incentives affect actorsíwillingness to propose new bills and to compromise on opponentsíproposals. The payoff from approving the other playerís proposal can be explained with the level of political sophistication, or human capital, of the electoral base. When a partyís voters have the ability to understand the quality of the bills proposed, the probability of having good bills approved increases. If the electorate of one of the two parties has a high degree of human capital, the other party has incentives to exert a positive effort knowing that, by refusing to approve the bill, the other player would be punished by voters. Indeed, when this is true for both parties and cost of efforts are small, we observe an equilibrium in which parties exert positive e§orts and high quality bills are approved. In contrast, if voters attach strong preference to a rejection, the result can be a political gridlock

See you on Facebook: the effect of social networking on human interaction

This paper proposes an evolutionary framework to explore the dynamics of social interaction in an environment characterized by online networking and increasing pressure on time. The model shows how time pressure encourages the choice to develop social interactions also through online networking instead of relying exclusively on face to face encounters. Our findings suggest that the joint influence exerted by the reduction in leisure time and the new opportunities of participation offered by web-mediated communication may progressively lead a growing share of the population to adopt networking sites as an indispensable environment for the development of interpersonal relationships.internet, computer-mediated communication, social networking, online networks, Facebook, human interaction, social capital

Will growth and technology destroy social interaction? The inverted U-shape hypothesis

This paper addresses two hot topics of the contemporary debate, social capital and economic growth. Our theoretical analysis sheds light on decisive but so far neglected issues: how does social capital accumulate over time? Which is the relationship between social capital, technical progress and economic growth in the long run? The analysis shows that the economy may be attracted by alternative steady states, depending on the initial social capital endowments and cultural exogenous parameters representing the relevance of social interaction and trust in well-being and production. When material consumption and relational goods are substitutable, the choice to devote more and more time to private activities may lead the economy to a “social poverty trap”, where the cooling of human relations causes a progressive destruction of the entire stock of social capital. In this case, the relationship of social capital with technical progress is described by an inverted U-shaped curve. However, the possibility exists for the economy to follow a virtuous trajectory where the stock of social capital endogenously and unboundedly grows. Such result may follow from a range of particular conditions, under which the economy behaves as if there was no substitutability between relational activities and material consumption.Social capital; relational goods; happyness; economic growth.