How Do You Feel About Going Green? Modelling Environmental Sentiments in a Growing Open Economy

Contrary to the near global consensus among the scientific community, public perceptions of climate change are known to differ between nations and to have fluctuated over time. To study such a stylised fact, this article develops a small-scale agent-based model that allows for feedback effects between sentiments, environmental regulation and macroeconomic outcomes in an open economy set-up. Conditional on the level of interaction between agents, two different basins of attraction emerge: one with the majority of the population supporting climate change mitigation policies, and another with most agents opposing environmental regulation. We demonstrate that complex dynamics might occur via a sequence of period-doubling bifurcations. Employment series are more persistent than sentiments, resulting in relatively high volatility in the latter and smooth long-waves in the labour market. A sufficiently robust response of sentiments to emissions may lead to the disappearance of the Pareto inferior equilibria, allowing for a unique green steady-state