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Maximin-optimal sustainable growth in a resource-based imperfect economy

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  • Bazhanov, Andrei

Abstract

I offer an approach linking a welfare criterion to the opportunities for sustainable development in an imperfect economy. The approach implies a dependence of the criterion on the economy's current state. The economy-linked criterion is constructed using an example with the maximin principle applied to a hybrid level-growth measure. This measure includes as special cases the conventional measures of consumption level and percent change as a measure of growth. The hybrid measure or geometrically weighted percent can be used for measuring sustainable growth as an alternative to percent. The problem is considered for the Dasgupta-Heal-Solow-Stiglitz model. Closed form solutions are obtained for the optimal paths including the paths dynamically consistent with the updates in reserve estimates.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16245.

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Date of creation: 18 Oct 2008
Date of revision: 13 Jul 2009
Handle: RePEc:pra:mprapa:16245

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Related research

Keywords: imperfect economy; endogenous preferences; essential nonrenewable resource; geometrically weighted percent; normative resource peak;

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References

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  1. Bazhanov, Andrei, 2008. "Sustainable growth: Compatibility between criterion and the initial state," MPRA Paper 9914, University Library of Munich, Germany.
  2. Christian Groth & Karl-Josef Koch & Thomas Steger, 2006. "Rethinking the Concept of Long-Run Economic Growth," CESifo Working Paper Series 1701, CESifo Group Munich.
  3. Daly, Herman E., 1990. "Toward some operational principles of sustainable development," Ecological Economics, Elsevier, Elsevier, vol. 2(1), pages 1-6, April.
  4. Asheim, Geir B. & Buchholz, Wolfgang & Hartwick, John M. & Mitra, Tapan & Withagen, Cees, 2005. "Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints," Memorandum, Oslo University, Department of Economics 23/2005, Oslo University, Department of Economics.
  5. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, Elsevier, vol. 10(1), pages 42-53, February.
  6. Bazhanov, Andrei, 2008. "Sustainable growth: The extraction-saving relationship," MPRA Paper 9911, University Library of Munich, Germany.
  7. John C. V. Pezzey, 2001. "Sustainability Policy and Environmental Policy," Economics and Environment Network Working Papers, Australian National University, Economics and Environment Network 0104, Australian National University, Economics and Environment Network.
  8. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, American Economic Association, vol. 67(5), pages 972-74, December.
  9. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 31(3), pages 730-742, August.
  10. Geir B. Asheim, 2005. "Intergenerational Ethics under Resource Constraints," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 313-330, September.
  11. B. Caillaud & R. Guesnerie & P. Rey & J. Tirole, 1988. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 1-26, Spring.
  12. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 41(4), pages 1188-1239, December.
  13. Gérard Gaudet, 2007. "Natural resource economics under the rule of Hotelling," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 40(4), pages 1033-1059, November.
  14. David Levhari & Nissan Liviatan, 1977. "Notes on Hotelling's Economics of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 10(2), pages 177-92, May.
  15. Bazhanov, Andrei V., 2007. "The transition to an oil contraction economy," Ecological Economics, Elsevier, Elsevier, vol. 64(1), pages 186-193, October.
  16. Grimaud, André & Rougé, Luc, 2003. "Polluting Non-Renewable Resources, Innovation and Growth : Welfare and Environmental Policy," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 206, Institut d'Économie Industrielle (IDEI), Toulouse.
  17. Leininger, Wolfgang, 1985. "Rawls' Maximin Criterion and Time-Consistency: Further Results," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 52(3), pages 505-13, July.
  18. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 163, Cowles Foundation for Research in Economics, Yale University.
  19. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Working Papers, Fondazione Eni Enrico Mattei 2003.109, Fondazione Eni Enrico Mattei.
  20. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, American Economic Association, vol. 66(5), pages 845-57, December.
  21. Tjalling C. Koopmans, 1962. "On Flexibility of Future Preference," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 150, Cowles Foundation for Research in Economics, Yale University.
  22. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-79, May.
  23. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
  24. Hueting, Roefie, 1990. "The Brundtland report : A matter of conflicting goals," Ecological Economics, Elsevier, Elsevier, vol. 2(2), pages 109-117, June.
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Citations

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Cited by:
  1. Bazhanov, Andrei, 2011. "Зависимость Долгосрочного Роста Ресурсной Экономики От Начального Состояния: Сравнение Моделей На Примере �," MPRA Paper 35888, University Library of Munich, Germany.
  2. Bazhanov, A., 2011. "The Dependence of the Potential Sustainability of a Resource Economy on the Initial State: a Comparison of Models Using the Example of Russian Oil Extraction," Journal of the New Economic Association, New Economic Association, New Economic Association, issue 12, pages 77-100.
  3. Andrei Bazhanov, 2012. "A Closed-Form Solution to Stollery’s Problem with Damage in Utility," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 39(4), pages 365-386, April.

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