The Poverty-Environment Trap in a Modified Romer Model with Dirtiness

Abstract

The model presented in this paper describes an economy with endogenous technical change and polluting production techniques. The main question we want to address is whether the adoption of “dirty” production processes might lead to a sustainable unique steady state, or guarantee the emergence of multiple equilibria. The application of the original Bogdanov–Takens theorem allows us to characterize the regions of the parametric space where the model exhibits either a global indeterminate equilibrium or a poverty-environment trap.