Sustainable Development Without Constraints
AbstractWe explore the possibility of representing sustainability concerns in the objective function of an optimal growth problem instead of as a constraint. In a general model with capital accumulation and resource depletion, we represent intergenerational equity using the pure rate of time preference and the elasticity of the marginal social utility of income and that a sustainability constraint would be either redundant or render the optimization problem indeterminate. The model also provides a basis for evaluating the deprecation of natural capital for adjusted national income accounts such that maximizing adjusted national income is equivalent to a period- by - period solution of the intertemporal welfare problem. This approach to sustainability rests on the firm theoretical foundations establish by three pioneers of economic dynamics and growth: Frank Ramsey, Harold Hotelling, and Tjalling Koopmans.
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Bibliographic InfoPaper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200009.
Length: 35 pages
Date of creation: 2000
Date of revision:
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