The Hartwick rule and the characterization of constant consumption paths in the presence of an exhaustible resource
AbstractThis paper deals with the interpretation of the Hartwick rule in the particular Dasgupta-Heal-Solow model with one capital good and one non-renewable resource. It is argued that the rule is more a descriptive property of constant consumption paths than a sustainability indicator. It is shown that investing the rents from the resource use into man-made capital is a necessary condition for an efficient resource depletion but it is not a sufficient condition for sustainability. A sustainable consumption indicator is described to characterize the sustainability of constant consumption paths.
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Bibliographic InfoPaper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2005-06.
Date of creation: 2005
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Hartwick rule; non-renewable resources; sustainable consumption.;
Find related papers by JEL classification:
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
- D99 - Microeconomics - - Intertemporal Choice - - - Other
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