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Maximin-optimal sustainable growth with nonrenewable resource and externalities

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  • Bazhanov, Andrei

Abstract

I offer an approach linking a welfare criterion to the "sustainable development potential" of the economy. This implies a dependence of a criterion on the information about the current state. I consider the problem for the Dasgupta-Heal-Solow-Stiglitz model with externalities. The economy-linked criterion is constructed on an example of 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 closed form solutions are obtained for the optimal paths including the paths, dynamically consistent with the information updates.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9510.

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Date of creation: 02 Jan 2008
Date of revision: 02 Jul 2008
Handle: RePEc:pra:mprapa:9510

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Keywords: essential nonrenewable resource; modified Hotelling Rule; economy-linked criterion; geometrically weighted percent; normative resource peak;

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  1. Bernard Caillaud & Patrick Rey & Roger Guesnerie & Jean Tirole, 1987. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," Working papers 472, Massachusetts Institute of Technology (MIT), Department of Economics.
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  10. Leininger, Wolfgang, 1985. "Rawls' Maximin Criterion and Time-Consistency: Further Results," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 505-13, July.
  11. Bazhanov, Andrei, 2006. "The peak of oil extraction and a modified maximin principle," MPRA Paper 14775, University Library of Munich, Germany, revised 12 Feb 2007.
  12. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-74, December.
  13. Bazhanov, Andrei, 2008. "Sustainable growth: Compatibility between criterion and the initial state," MPRA Paper 9914, University Library of Munich, Germany.
  14. Christian Groth & Karl-Josef Koch & Thomas M. Steger, 2006. "Rethinking the Concept of Long-Run Economic Growth," Discussion Papers 06-06, University of Copenhagen. Department of Economics.
  15. R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
  16. Bazhanov, Andrei, 2006. "Decreasing of Oil Extraction: Consumption behavior along transition paths," MPRA Paper 469, University Library of Munich, Germany.
  17. Bazhanov, Andrei V., 2007. "The transition to an oil contraction economy," Ecological Economics, Elsevier, vol. 64(1), pages 186-193, October.
  18. John M. Hartwick, 1990. "Natural Resources, National Accounting and Economic Depreciation," Working Papers 771, Queen's University, Department of Economics.
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  20. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
  21. Bazhanov, Andrei, 2008. "Inconsistency between a criterion and the initial conditions," MPRA Paper 6792, University Library of Munich, Germany.
  22. Gérard Gaudet, 2007. "Natural resource economics under the rule of Hotelling," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1033-1059, November.
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Citations

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Cited by:
  1. Andrei V. Bazhanov, 2009. "A constant-utility criterion linked to an imperfect economy affected by irreversible global warming," EERI Research Paper Series EERI_RP_2009_03, Economics and Econometrics Research Institute (EERI), Brussels.
  2. Bazhanov, Andrei & Belyaev, Alexander, 2009. "Адекватность Закрытой Модели Для Российской Экономики В Задаче Сравнительного Анализа Энергетической Стра�," MPRA Paper 15109, University Library of Munich, Germany.

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