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LIFE CYCLE OF PRODUCTS AND CYCLES

Published online by Cambridge University Press:  04 March 2010

Jean De Beir ,
Mouez Fodha  and
Francesco Magris
Jean De Beir
Affiliation:
EPEE, University Evry-Val-d'Essonne
Mouez Fodha*
Affiliation:
Centre d'Economie de la Sorbonne and Paris School of Economics
Francesco Magris
Affiliation:
EPEE, University Evry-Val d'Essonne
*
Address correspondence to: Mouez Fodha, Centre d'Economie de la Sorbonne, Universié Paris 1 Panthéon–Sorbonne, Maison des Sciences Economique, 106–112 Bld de l'Hôpital, 75013 Paris Cedex, France; e-mail: fodha@univ-paris1.fr.
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Abstract

The aim of this paper is to examine whether the development of waste recycling activities can be a source of economic fluctuations. We assume that the recycling sector has four fundamental characteristics. (i) The production factors are restricted by the production of the last period. (ii) These production factors are waste for which the price determination is noncompetitive. (iii) The sector produces a recycled good, which is a perfect substitute for the primary good. (iv) It reduces the waste stream. We consider the simplest economy, with an infinitely lived agent and a life-cycle hypothesis for the goods. We show that the equilibrium is unique and is always determinate. In spite of the lack of indeterminacy, however, our economy can display cyclical behavior, depending on some usual conditions on parameters. Namely, the steady state may undergo a flip bifurcation or a Hopf bifurcation.

Keywords

CyclesRecyclingWaste
Type
Articles
Information
Macroeconomic Dynamics , Volume 14 , Issue 2 , April 2010 , pp. 212 - 230
Copyright
Copyright © Cambridge University Press 2010

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