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Constant Consumption and the Economic Depreciation of Natural Capital: The Non-Autonomous Case

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  • Ngo Van Long
  • John M. Hartwick

Abstract

We investigate economic depreciation of natural capital for cases of non-stationary output prices, technology, and interest rates. For the former two cases (exogenous movements in prices and technology), constant consumption emerges under a strategy of investing to cover off economic depreciation. The interest rate case requires a modified sinking fund strategy.

Suggested Citation

  • Ngo Van Long & John M. Hartwick, 1996. "Constant Consumption and the Economic Depreciation of Natural Capital: The Non-Autonomous Case," CESifo Working Paper Series 114, CESifo.
    • Handle: RePEc:ces:ceswps:_114
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    Cited by:

    1. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    2. Butterfield, David W., 2003. "Resource depletion under uncertainty: implications for mine depreciation, Hartwick's Rule and national accounting," Resource and Energy Economics, Elsevier, vol. 25(3), pages 219-238, August.
    3. Mino, Kazuo, 2004. "Weitzman's rule with market distortions," Japan and the World Economy, Elsevier, vol. 16(3), pages 307-329, August.
    4. Hartwick, John M. & Van Long, Ngo & Tian, Huilan, 2001. "Deforestation and Development in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 235-251, May.
    5. Mino, Kazuo, 2004. "On the Generalized Weitzman's Rule," MPRA Paper 16996, University Library of Munich, Germany.

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