Nonlinear dynamics in an environmental overlapping generations model with technology choice

Abstract

This paper introduces an overlapping generations model to explore the interplay between economic growth, the environment, and endogenous technology adoption. Considering an economy with physical capital and publicly funded human capital, the analytical framework extends Prieur and Br & eacute;chet (2013, Macroeconomic Dynamics 17, 1135-1157) by incorporating the endogenous technology choice mechanism from Umezuki and Yokoo (2019, Journal of Economic Dynamics & Control 100, 164-175). The analysis focuses on how the choice of capital-intensive technologies impacts environmental dynamics. The model reveals complex equilibrium dynamics, driven by a core trade-off between individuals' resource allocation on consumption versus environmental protection and firms' technology decisions.