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Non-renewable resources, subsistence consumption, and Hartwick's investment rule

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  • Antony, Jürgen
  • Klarl, Torben

Abstract

This note is concerned with efficient use of non-renewable resources if households are characterized by Stone-Geary preferences with a minimum subsistence level of consumption. We provide a closed form solution for the case of Cobb–Douglas production with constant returns to scale in reproducible capital and resource input. The existence of a subsistence level of consumption implies the economy to converge asymptotically towards a growth path that satisfies the well known Hartwick investment rule. We calibrate the model reflecting the endowment of resource depending low-income countries and confront it with the World Bank's poverty lines.

Suggested Citation

  • Antony, Jürgen & Klarl, Torben, 2019. "Non-renewable resources, subsistence consumption, and Hartwick's investment rule," Resource and Energy Economics, Elsevier, vol. 55(C), pages 124-142.
    • Handle: RePEc:eee:resene:v:55:y:2019:i:c:p:124-142
    DOI: 10.1016/j.reseneeco.2018.11.002
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    More about this item

    Keywords

    Hartwick rule; Subsistence consumption; Non-renewable resources;
    All these keywords.

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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