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Renewable Resources, Capital Accumulation, and Economic Growth

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  • Wei-Bin Zhang

    (Ritsumeikan Asia Pacific University)

Abstract

This paper proposes a dynamic economic model with physical capital and renewable resources. Different from most of the neoclassical growth models with renewable resources which are based on microeconomic foundation and neglect physical capital accumulation, this study proposes a growth model with dynamics of renewable resources and physical capital accumulation. The model is a synthesis of the neoclassical growth theory and the traditional dynamic models of renewable resources with an alternative approach to household behavior. The model describes a dynamic interdependence among physical accumulation, resource change, and division of labor under perfect competition.Because of its refined economic structure, our study enables some interactions among economic variables which are not found in the existing literature on economic growth with renewable resources. We simulate the model to demonstrate the existence of equilibrium points and motion of the dynamic system. Our comparative dynamic analysis shows, for instance, that a rise in the propensity to consume the renewable resource increases the interest rate and reduces the national and production sector’s capital stocks, wage rate and level of the consumption good. Moreover,it initially reduces and then increases the capital stocks of the resource sector and the consumption and price of the renewable resource. The stock of the renewable resource is initially increased and then reduced. Finally, labor is redistributed from the production to the resource sector.

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Bibliographic Info

Article provided by Society for Promotion of Business Information Technology (BIT) in its journal Business Systems Research.

Volume (Year): 2 (2011)
Issue (Month): 1 ()
Pages: 24-35

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Handle: RePEc:bit:bsrysr:v:2:y:2011:i:1:p:24-35

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Postal: Udruga BIT, Faculty of Economics and Business, Trg J. F. Kennedy 6, 10000 Zagreb, Croatia.
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Keywords: renewable resource; harvesting; capital accumulation; economic growth;

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References

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  1. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 568, China Economics and Management Academy, Central University of Finance and Economics.
  2. Erwin H. Bulte & G. Cornelis van Kooten, 1999. "Economics of Antipoaching Enforcement and the Ivory Trade Ban," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(2), pages 453-466.
  3. Xavier Sala-i-Martin, 1996. "Transfers, Social Safety Nets, and Economic Growth," IMF Working Papers 96/40, International Monetary Fund.
  4. Rögnvaldur Hannesson, 2000. "Renewable resources and the gains from trade," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 33(1), pages 122-132, February.
  5. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 62, pages 124.
  6. Abigail Barr, 1995. "The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana," CSAE Working Paper Series 1995-11, Centre for the Study of African Economies, University of Oxford.
  7. Martin, Philippe & Rogers, Carol Ann, 1995. "Stabilization Policy, Learning by Doing, and Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1130, C.E.P.R. Discussion Papers.
  8. Jie Zhang & Junsen Zhang, 2005. "The Effect of Life Expectancy on Fertility, Saving, Schooling and Economic Growth: Theory and Evidence," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 107(1), pages 45-66, 03.
  9. Naoto Jinji, 2006. "International trade and terrestrial open-access renewable resources in a small open economy," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 39(3), pages 790-808, August.
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Cited by:
  1. Zhang Wei-Bin, 2011. "Economic Growth And Dynamics Of Renewable Resource With Housing, Agricultural And Resource Land Use," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 6(2), pages 151-174, August.
  2. Wei-Bin ZHANG, 2014. "Human Capital, Wealth, and Renewable Resources," Expert Journal of Economics, Sprint Investify, vol. 2(1), pages 1-20.
  3. Wei-Bin Zhang, 2013. "Habit Formation and Preference Change with Capital and Renewable Resources," Business Systems Research, Society for Promotion of Business Information Technology (BIT), Society for Promotion of Business Information Technology (BIT), vol. 4(2), pages 108-125.

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