Sustainable growth: Compatibility between criterion and the initial state
AbstractThere is a large body of research devoted to our understanding of sustainable growth in resource based economies. Some of this research is inapplicable to the real economy. This is a result of inconsistency between the commonly used criteria and the initial state of the real economy. The inconsistency can lead to either inferior, unsustainable, or nonexistent optimal paths of consumption per capita if the criterion is not linked to the initial state. We demonstrate this in a model of the Dasgupta-Heal-Solow-Stiglitz variety with the constant consumption per capita as a benchmark criterion. Our results show that the inconsistency in this case can imply Pareto inferior paths of consumption per capita.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9914.
Date of creation: 08 Aug 2008
Date of revision:
essential nonrenewable resource; sustainable extraction; criterion inconsistency; Hartwick Rule;
Find related papers by JEL classification:
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-14 (All new papers)
- NEP-DGE-2008-08-14 (Dynamic General Equilibrium)
- NEP-ENV-2008-08-14 (Environmental Economics)
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