Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value
AbstractThis paper studies the undiscounted utilitarian optimal paths of the canonicalDasgupta-Heal-Solow model when the stock of natural capital is a direct argument ofwell-being, besides consumption. We use a Keynes-Ramsey rule which yields a generalization of Hartwick?s rule : if society has a zero discount rate but is ready to acceptintertemporal substitution, net investment should not be zero as in the maximin casebut should be positive, its level depending on the distance between the current and thelong run bliss level of utility. We characterize solutions in the Cobb-Douglas utility andproduction case, and analyse the influence of the intertemporal elasticity of substitutionon the time profile of the optimal paths. We show that, in the Cobb-Douglas case, theratio of the values of the resource and capital stocks remains constant along the optimal path, and is independent of initial conditions.
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Bibliographic InfoArticle provided by Dalloz in its journal Revue d'économie politique.
Volume (Year): Volume 118 (2008)
Issue (Month): 6 ()
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Web page: http://www.cairn.info/revue-d-economie-politique.htm
exhaustible resources; Hartwick's rule; intertemporal substitution;
Other versions of this item:
- Antoine d'Autume & Katheline Schubert, 2009. "Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value," Documents de travail du Centre d'Economie de la Sorbonne 09012, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- D9 - Microeconomics - - Intertemporal Choice
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
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- repec:hal:cesptp:halshs-00547282 is not listed on IDEAS
- Antoine d'Autume & John M. Hartwick & Katheline Schubert, 2009.
"The zero discounting and maximin optimal paths in a simple model of global warming,"
Documents de travail du Centre d'Economie de la Sorbonne
09013, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- d'Autume, Antoine & Hartwick, John M. & Schubert, Katheline, 2010. "The zero discounting and maximin optimal paths in a simple model of global warming," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 193-207, March.
- Robert D. Cairns & Vincent Martinet, 2012.
"An Environmental-Economic Measure of Sustainable Development,"
EconomiX Working Papers
2012-2, University of Paris West - Nanterre la Défense, EconomiX.
- Cairns, Robert D. & Martinet, Vincent, 2014. "An environmental-economic measure of sustainable development," European Economic Review, Elsevier, vol. 69(C), pages 4-17.
- Robert D. Cairns & Vincent Martinet, 2013. "An Environmental-Economic Measure of Sustainable Development," CESifo Working Paper Series 4327, CESifo Group Munich.
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