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Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development?

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  • Lucas Bretschger
  • Karen Pittel

Abstract

We analyse long-term consumption paths in a dynamic two-sector economy with overlapping generations. Each young generation saves for the retirement age, both with private savings and pension funds. The productivity of each sector can be raised by sector-specific research, while the essential use of a non-renewable natural resource poses a threat to consumption possibilities in the long run. Bonds, the two types innovations, and resource stocks are the different investment opportunities. We show that pension funds have a positive impact on long-term development, provided that individuals have a preference for own investments. In this case, sustainability is more likely to be achieved due to pension fund savings.

Suggested Citation

  • Lucas Bretschger & Karen Pittel, 2005. "Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 355-376, September.
  • Handle: RePEc:ses:arsjes:2005-iii-3
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    Cited by:

    1. Karen Pittel & Lucas Bretschger, 2008. "Sectoral Heterogeneity, Resource Depletion, and Directed Technical Change: Theory and Policy," CER-ETH Economics working paper series 08/96, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Karen Pittel & Lucas Bretschger, 2010. "The implications of heterogeneous resource intensities on technical change and growth," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(4), pages 1173-1197, November.

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    More about this item

    Keywords

    economic growth; pension funds; sustainable development; financial investments; overlapping generations;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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