NANCY Seminar – Stefano Bosi (Université Paris-Saclay)

Event details :

Title: Global warming and the rise of populism, co-written with David Desmarchelier

Abstract: The present paper develops a unified framework at the crossroad of economics, political and environmental sciences and somehow of epidemiology. Populism is assimilated to climate skepticism and is viewed as an opinion which spread into the population. Inspiring from the compartmental models in epidemiology, the population is splitted in two groups that interacts each other: the skeptics toward climate change (i.e. populists) and the environmentalists. This political block is embedded into a Ramsey-Cass-Koopmans model where a pollution externality is assumed to come from production. A Pigouvian tax is introduced to finance depollution expenditures according to a balanced budget rule. To account for pressures of populists to remove environmental policies, the green-tax rate is negatively affected by the share of skeptics into the population. The study of this unified framework reveals an interesting result: populism allows to observe the occurrence of a stable limit cycle, through a Hopf bifurcation, around the steady state of the economy, whatever the pollution effect on marginal utility of consumption while such a result only occurs under a positive effect without populism. To say it differently, populism exacerbates the volatility induced by pollution and then, even if right-wing populists give a strong priority to economic issues, they have to support environmental policies rather than to reject them.