University of Oulu

Saddles and bifurcations in an overlapping generations economy with a renewable resource

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Author: Koskela, Erkki; Ollikainen, Markku; Puhakka, Mikko1
Organizations: 1University of Oulu, Oulu Business School, Department of Economics
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, )
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Language: English
Published: 2008
Publish Date: 2008-03-10


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.

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Series: University of Oulu, Department of Economics, Working papers
Issue: 803
Copyright information: © University of Oulu, 2008. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.