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Growth on a finite planet: resources, technology and population in the long run

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  • Pietro Peretto
  • Simone Valente

Abstract

We study the interactions between technological change, resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility. We find a steady state in which population is constant and determined by resource scarcity while income grows exponentially. If labor and resources are substitutes in production, income and fertility dynamics are stable and the steady state is the global attractor of the system. If labor and resources are complements, income and fertility dynamics are unstable and drive the economy towards either demographic explosion or collapse. We calibrate the model numerically to match past US data on fertility and land scarcity, obtaining future scenarios for the current century and quantifying the response of fertility and productivity to exogenous shocks. Copyright Springer Science+Business Media New York 2015

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  • Pietro Peretto & Simone Valente, 2015. "Growth on a finite planet: resources, technology and population in the long run," Journal of Economic Growth, Springer, vol. 20(3), pages 305-331, September.
    • Handle: RePEc:kap:jecgro:v:20:y:2015:i:3:p:305-331
    DOI: 10.1007/s10887-015-9118-z
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    More about this item

    Keywords

    Endogenous innovation; Resource scarcity; Population growth; Fertility choices; E10; L16; O31; O40;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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