Endogenous fluctuations induced by nonlinear pollution accumulation in an OLG economy and the bifurcation control

This paper aims to study the influence of nonlinear pollution accumulation on economic growth by incorporating the nonlinear pollution accumulation into an OLG model. It is shown that the nonlinearity can yield very complex dynamics, including the flip bifurcation resulting in sustained fluctuations in economy. This indicates that the nonlinear pollution accumulation can be a source of intergenerational inequity. To stabilize the complex motion and thus to control the fluctuations, a bifurcation control method from control theory is proposed. The welfare analysis shows the sustainable development criterion can be met in the controlled system but not in the original system.