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Sectoral Heterogeneity, Resource Depletion, and Directed Technical Change: Theory and Policy

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Author Info
Karen Pittel () (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
Lucas Bretschger () (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)

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Abstract

We analyze an economy in which sectors are heterogeneous with respect to the intensity of natural resource use. Long-term dynamics are driven by resource prices, sectoral composition, and directed technical change. We study the balanced growth path and determine stability conditions. Technical change is found to be biased towards the resource-intensive sector. Resource taxes have no impact on dynamics except when the tax rate varies over time. Constant research subsidies raise the growth rate while increasing subsidies have the opposite effect. We also find that supporting sectors by providing them with productivity enhancing public goods can raise the growth rate of the economy and additionally provide an effective tool for structural policy.

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Publisher Info
Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series Economics working paper series with number 08/96.

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Length: 31 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:eth:wpswif:08-96

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Related research
Keywords: sustainable development; sectoral heterogeneity; directed technical change;

Find related papers by JEL classification:
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lucas Bretschger & Karen Pittel, 2005. "Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 355-376, September. [Downloadable!]
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  2. Christian Scholz & Georg Ziemes, 1999. "Exhaustible Resources, Monopolistic Competition, and Endogenous Growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(2), pages 169-185, March. [Downloadable!] (restricted)
  3. Grimaud, Andre & Rouge, Luc, 2003. "Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 433-453, March. [Downloadable!] (restricted)
  4. Piyabha Kongsamut & Danyang Xie & Sergio Rebelo, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
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  5. Lopez, Ramon E. & Anriquez, Gustavo & Gulati, Sumeet, 2007. "Structural change and sustainable development," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 307-322, May. [Downloadable!] (restricted)
  6. Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," 2006 Meeting Papers 207, Society for Economic Dynamics. [Downloadable!]
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  7. Lucas Bretschger, 2008. "Population growth and natural resource scarcity: long-run development under seemingly unfavourable conditions," Economics working paper series 08/87, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich. [Downloadable!]
  8. Edward Barbier, 1999. "Endogenous Growth and Natural Resource Scarcity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(1), pages 51-74, July. [Downloadable!] (restricted)
  9. Groth, Christian & Schou, Poul, 2007. "Growth and non-renewable resources: The different roles of capital and resource taxes," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 80-98, January. [Downloadable!] (restricted)
  10. Smulders, Sjak & de Nooij, Michiel, 2003. "The impact of energy conservation on technology and economic growth," Resource and Energy Economics, Elsevier, vol. 25(1), pages 59-79, February. [Downloadable!] (restricted)
  11. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 781-809, October.
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  12. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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  13. Grimaud, Andre & Rouge, Luc, 2005. "Polluting non-renewable resources, innovation and growth: welfare and environmental policy," Resource and Energy Economics, Elsevier, vol. 27(2), pages 109-129, June. [Downloadable!] (restricted)
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