Sustainable Growth and the Green Golden Rule
AbstractWe study a growth model with an environmental asset which is a source of utility and an input to consumption and production. The stock of this asset follows its own ecological dynamics, which are affected by economic activity. We study the implications of an approach to ranking sequences of consumption and environment over time that place weight both on the characteristics of the sequence over any finite period and on its very long run or limiting characteristics. Chichilnisky  has called these "sustainable preferences". The criterion shows more intertemporal symmetry than the discounted utilitarian approach. which clearly emphasizes the immediate future at the expense of the long run. In this respect Chichilniskys criterion captures some of the concerns of those who argue for sustainability and for a heightened sense of responsibility to the future. To characterize optimal paths we define the "green golden rule", the path which maximizes long-run sustainable utility from consumption and environment.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4430.
Date of creation: Aug 1993
Date of revision:
Publication status: Published as "The Green Golden Rule", EL, Vol. 49, no. 2 (1995): 175-179.
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- D90 - Microeconomics - - Intertemporal Choice - - - General
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
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