A continuous time economic growth model with time delays in environmental degradation

Abstract

The aim of this work is to analyse the interplay between economic growth and environmental quality. Specifically, the article considers an economic growth model with optimising agents à la Ramsey where production negatively affects the environment. The novelty of this work is to assume that such a negative impact does occur with a certain time lag rather than instantaneously, as is commonly assumed in economic models. The existence of (discrete) time delays in this process may be a source of instability of the unique stationary equilibrium of the system and may cause the emergence of Hopf bifurcations.