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The Problem of Optimal Endogenous Growth with Exhaustible Resources Revisited

In: Green Growth and Sustainable Development

Author

Listed:
  • Sergey Aseev

    (International Institute for Applied Systems Analysis (IIASA)
    Steklov Mathematical Institute)

  • Konstantin Besov

    (Steklov Mathematical Institute)

  • Serguei Kaniovski

    (Austrian Institute of Economic Research (WIFO))

Abstract

We study optimal research and extraction policies in an endogenous growth model in which both production and research require an exhaustible resource. It is shown that optimal growth is not sustainable if the accumulation of knowledge depends on the resource as an input, or if the returns to scale in research are decreasing, or the economy is too small. The model is stated as an infinite-horizon optimal control problem with an integral constraint on the control variables. We consider the main mathematical aspects of the problem, establish an existence theorem and derive an appropriate version of the Pontryagin maximum principle. A complete characterization of the optimal transitional dynamics is given.

Suggested Citation

  • Sergey Aseev & Konstantin Besov & Serguei Kaniovski, 2013. "The Problem of Optimal Endogenous Growth with Exhaustible Resources Revisited," Dynamic Modeling and Econometrics in Economics and Finance, in: Jesús Crespo Cuaresma & Tapio Palokangas & Alexander Tarasyev (ed.), Green Growth and Sustainable Development, edition 127, pages 3-30, Springer.
    • Handle: RePEc:spr:dymchp:978-3-642-34354-4_1
    DOI: 10.1007/978-3-642-34354-4_1
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    Cited by:

    1. Kaniovski, Serguei, 2017. "The Optimal Use of Exhaustible Resources under Nonconstant Returns to Scale," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168079, Verein für Socialpolitik / German Economic Association.
    2. Sergey Aseev & Konstantin Besov & Serguei Kaniovski, 2016. "The Optimal Use of Exhaustible Resources Under Non-constant Returns to Scale," WIFO Working Papers 525, WIFO.

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