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Intergenerational equity with individual impatience in a model of optimal and sustainable growth

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  • Endress, Lee H.
  • Pongkijvorasin, Sittidaj
  • Roumasset, James
  • Wada, Christopher A.

Abstract

Among the ethical objections to intergenerational impartiality is the violation of consumer sovereignty given that individuals are impatient. We accommodate that concern by distinguishing intra- and inter-generational discounting in an OLG model suitable for analyzing sustainability issues. Under the assumption of constant elasticity of marginal felicity, the optimum trajectory of aggregate consumption is guided, via the Ramsey condition, by the intergenerational discount rate but not the personal discount rate. In an economy with produced capital and a renewable resource, intergenerational neutrality results in a sustained growth path, without the necessity of a sustainability constraint, even in the presence of intragenerational impatience. We also find that green net national product remains constant along the optimal approach path to golden rule consumption.

Suggested Citation

  • Endress, Lee H. & Pongkijvorasin, Sittidaj & Roumasset, James & Wada, Christopher A., 2014. "Intergenerational equity with individual impatience in a model of optimal and sustainable growth," Resource and Energy Economics, Elsevier, vol. 36(2), pages 620-635.
  • Handle: RePEc:eee:resene:v:36:y:2014:i:2:p:620-635
    DOI: 10.1016/j.reseneeco.2013.10.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lee Endress & James Roumasset & Christopher Wada, 2016. "Do Natural Disasters Make Sustainable Growth Impossible?," Working Papers 2016-12, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    2. Mubashir Qasim, 2018. "Some Links between Sustainability and Well-Being," Working Papers in Economics 18/13, University of Waikato.
    3. Can Askan Mavi, 2017. "What Can Abrupt Events Tell Us About Sustainability ?," Working Papers hal-01628682, HAL.
    4. Lugovoy, O. & Polbin, A., 2016. "On Intergenerational Distribution of the Burden of Greenhouse Gas Emissions," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 12-39.
    5. Six, M. & Wirl, F., 2015. "Optimal pollution management when discount rates are endogenous," Resource and Energy Economics, Elsevier, vol. 42(C), pages 53-70.
    6. Rashidi, Hamidreza & GhaffarianHoseini, Ali & GhaffarianHoseini, Amirhosein & Nik Sulaiman, Nik Meriam & Tookey, John & Hashim, Nur Awanis, 2015. "Application of wastewater treatment in sustainable design of green built environments: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 845-856.
    7. Laurence J. Kotlikoff & Andrey Polbin & Andrey Zubarev, 2016. "Will the Paris Accord Accelerate Climate Change?," NBER Working Papers 22731, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Sustainability of optimal growth; Intergenerational equity; Intra-generational discounting; Renewable resources; GNNP;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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