The importance of the rate of change of the pollution stock in determining the damage to the environment has been an issue of increasing concern in the literature. This paper uses a three-sector (economy, population and environment), non-linear, discrete time, calibrated model to examine...

Two common properties of macroeconomic models are non-linearities and dynamics characterised by a non-zero number of unstable eigenvalues. Under these circumstances, a common approach is to make analysis more tractable by linearising the model in the neighbourhood of an appropriate steady-state....

In this paper, we investigate the magnitude of errors that come about as a consequence of using a linear approximation to a well-known optimising model. We do this by taking a calibrated version of the neoclassical adjustment-cost model of investment due to Hayashi (1982).