Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth
AbstractCan the knife-edge restriction on technology imposed by standard endogenous growth models be relaxed by allowing for nonrenewable resources entering the technology? To answer this question we examine whether stable endogenous growth is compatible with increasing returns to scale with respect to producible inputs when nonrenewable resources are a necessary input into the growth engine. In a one-sector optimal growth model, we find that the existence and stability of a steady state is compatible with a wide range of parameter values, including cases with increasing returns to capital and/or the natural resource. However, in all cases, population growth turns out to be necessary for stable growth in pr. capita consumption. Thus, under these circumstances, (strictly) endogenous stable growth is not possible, not even as a knife-edge case. But semi-endogenous growth is an attractive alternative allowing a rich set of determinants of long-run growth.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 00-02.
Length: 27 pages
Date of creation: Feb 2000
Date of revision:
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Semi-endogenous Growth; Optimal Growth; Knife-edge; Robustness; Nonrenewable Resources;
Other versions of this item:
- Christian Groth & Poul Schou, 2002. "Can non-renewable resources alleviate the knife-edge character of endogenous growth?," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 386-411, July.
- Christian Groth, 2000. "Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth?," Econometric Society World Congress 2000 Contributed Papers 1480, Econometric Society.
- Groth, C. & Schou, P., 2000. "Can Nonrenewable Resources Alleviate the Knife-Edge Character of Endogenous Growth," Papers 00-02, Carleton - School of Public Administration.
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-22 (All new papers)
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