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Exhaustible Resources in a Dynamic Input-Output Model with 'Classical' Features

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  • Heinz Kurz
  • Neri Salvadori

Abstract

This paper discusses the problem of exhaustible resources in a dynamic input-output model with 'classical' features. Both the quantity side and the price and distribution side are discussed. The argument is developed using the simplifying assump- tions that there is no technical progress and that no new deposits of the exhaustible resources are discovered. To avoid the ' end-of-world' scenario, it is assumed that there is a 'backstop technology': this implies that exhaustible resources are useful but not necessary in the production and reproduction of commodities. A necessary and sufficient condition for the existence of paths of prices, quantities produced, and stocks of resources converging to the ultralong-period position is determined, provided that the backstop technology exhibits some appropriate properties. In addition, an algorithm to determine these paths is suggested. A numerical example illustrates the findings.

Suggested Citation

  • Heinz Kurz & Neri Salvadori, 1997. "Exhaustible Resources in a Dynamic Input-Output Model with 'Classical' Features," Economic Systems Research, Taylor & Francis Journals, vol. 9(3), pages 235-252.
    • Handle: RePEc:taf:ecsysr:v:9:y:1997:i:3:p:235-252
    DOI: 10.1080/09535319700000017
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    Citations

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    Cited by:

    1. Fabio Ravagnani, 2008. "Classical Theory and Exhaustible Natural Resources: Notes on the Current Debate," Review of Political Economy, Taylor & Francis Journals, vol. 20(1), pages 79-93.
    2. Cohen, Boyd & Winn, Monika I., 2007. "Market imperfections, opportunity and sustainable entrepreneurship," Journal of Business Venturing, Elsevier, vol. 22(1), pages 29-49, January.
    3. Yoann Verger, 2015. "Sraffa and the environment," Working Papers hal-01186009, HAL.
    4. Yoann Verger, 2015. "A Critique of Attempts to Introduce Hotelling's rule in Sraffa's Theory," Working Papers hal-01193072, HAL.
    5. Sergio Parrinello, 2002. "Exhaustible natural resources, normal prices and intertemporal equilibrium," Working Papers in Public Economics 57, University of Rome La Sapienza, Department of Economics and Law.
    6. Yoann Verger, 2017. "Sraffa and the revenue of the owner of non- renewable natural resources: notes on a never- ending debate [Sraffa et le revenu du propriétaire d'une ressource naturelle non-renouvelable: notes sur u," Working Papers hal-01596166, HAL.
    7. Biao Huang, 2018. "An exhaustible resources model in a dynamic input–output framework: a possible reconciliation between Ricardo and Hotelling," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-24, December.
    8. Borissov, Kirill, 2004. "An intertemporal general equilibrium model with given real wage rates," Structural Change and Economic Dynamics, Elsevier, vol. 15(2), pages 207-233, June.
    9. Kurz, Heinz D. & Salvadori, Neri, 2000. "Economic dynamics in a simple model with exhaustible resources and a given real wage rate," Structural Change and Economic Dynamics, Elsevier, vol. 11(1-2), pages 167-179, July.
    10. Sergio Parrinello, 2004. "The Notion of Effectual Supply and the Theory of Normal Prices with Exhaustible Natural Resources," Economic Systems Research, Taylor & Francis Journals, vol. 16(3), pages 311-322.

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