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Energy saving technological progress in overlapping generations economies with renewable and non-renewable resources

Author

Listed:
  • Burcu FAZLIOĞLU

    (Bilkent Universitesi)

  • Çağrı SAĞLAM

    (Bilkent Universitesi)

Abstract

We study the effects of energy saving technological progress and substitution of renewable energy resources with non-renewable resources on natural resource depletion and long run growth. We develop a growth model in two-period overlapping generations framework incorporating the presence of both renewable and non-renewable energy resources and resource augmenting technological progress. We provide an analytical characterization of the balanced growth path and analyze the conditions for the economy to exhibit positive long run growth. Then, we investigate the effects of discount factor, resource augmenting technological progress and intensity of resources in energy production on the depletion rate. We also examine whether the long run growth is sustainable or optimal. Our main finding is that the effect of an increase in the intensity of the renewable resources in producing energy on long run growth is positive. In addition although exhaustible resources are essential in production the economy can be sustained and the balanced growth path is optimal.

Suggested Citation

  • Burcu FAZLIOĞLU & Çağrı SAĞLAM, 2012. "Energy saving technological progress in overlapping generations economies with renewable and non-renewable resources," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 27(318), pages 27-56.
    • Handle: RePEc:iif:iifjrn:v:27:y:2012:i:318:p:27-56
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    More about this item

    Keywords

    Energy saving technological progress; Overlapping generations model; Longrun growth; Optimality; Sustainability;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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