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Finite Resources and the World Economy

In: NBER International Seminar on Macroeconomics 2021

Author

Listed:
  • John Hassler
  • Per Krusell
  • Conny Olovsson

Abstract

We build and evaluate a global macroeconomic model incorporating natural-resource scarcity. The model features low short-run substitutability between the natural resource and other inputs, while in the longer run endogenous directed technical change—allowing the economy to save on scarce resources—generates much higher substitutability, with rather stable cost shares. A nontrivial feature of the framework is secularly increasing resource use: initially, when the resource is abundant, much less is used of it, and as physical and human capital are accumulated, its use increases. The model is also able to generate highly volatile prices at higher frequencies.
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Suggested Citation

  • John Hassler & Per Krusell & Conny Olovsson, 2021. "Finite Resources and the World Economy," NBER Chapters, in: NBER International Seminar on Macroeconomics 2021, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14597
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    Cited by:

    1. is not listed on IDEAS
    2. H. Schwerin, 2025. "Long-run substitutability between fossil and renewable energy: global evidence 1800–2012," Empirical Economics, Springer, vol. 69(1), pages 129-148, July.
    3. Mar Delgado-Téllez & Javier Quintana & Daniel Santabárbara, 2025. "Carbon pricing, border adjustment and renewable energy investment: a network approach," Working Papers 2506, Banco de España.
    4. Nævdal Eric & Wagner Martin, 2025. "A Note on the Optimal Speed of Transition: Aghion and Blanchard Revisited," German Economic Review, De Gruyter, vol. 26(1), pages 1-14.
    5. Guido Ascari & Andrea Colciago & Timo Haber & Stefan Wöhrmüller, 2025. "Inequality along the European green transition," Working Papers 830, DNB.
    6. Per Krusell & Tony Smith, 2022. "Climate Change Around the World," Cowles Foundation Discussion Papers 2342, Cowles Foundation for Research in Economics, Yale University.
    7. Vicknair, David & Tansey, Michael & O'Brien, Thomas E., 2022. "Measuring fossil fuel reserves: A simulation and review of the U.S. Securities and Exchange Commission approach," Resources Policy, Elsevier, vol. 79(C).
    8. André Grimaud & Luc Rouge, 2025. "Technology Shocks, Directed Technical Progress and Climate Change," Working Papers hal-05022723, HAL.
    9. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.

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