Fractal attractors in economic growth models with random pollution externalities

Authors

Davide La Torre, University of Milan
Simone Marsiglio, University of WollongongFollow
Fabio Privileggi, University of Turin

RIS ID

128205

Publication Details

La Torre, D., Marsiglio, S. & Privileggi, F. (2018). Fractal attractors in economic growth models with random pollution externalities. Chaos, 28 (5), 055916-1-055916-12.

Abstract

We analyze a discrete time two-sector economic growth model where the production technologies in the final and human capital sectors are affected by random shocks both directly (via productivity and factor shares) and indirectly (via a pollution externality). We determine the optimal dynamics in the decentralized economy and show how these dynamics can be described in terms of a two-dimensional affine iterated function system with probability. This allows us to identify a suitable parameter configuration capable of generating exactly the classical Barnsley's fern as the attractor of the log-linearized optimal dynamical system.