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Growth on a Finite Planet: Resources, Technology and Population in the Long Run

  • Pietro F. Peretto
  • Simone Valente

We characterize the interactions between technological change, natural resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility choices. We show that there exists a pseudo-Malthusian equilibrium in which population is constant and income grows at a constant rate: the equilibrium population level is determined by resource scarcity but is independent of technology. The stability properties are driven by (i) the income reaction to increased resource scarcity and (ii) the fertility response to income dynamics, and ultimately depend on whether labor and resources are complements or substitutes in production. Under substitutability, the pseudo-Malthusian equilibrium is a global attractor. Under complementarity, population follows diverging paths of explosion or implosion.

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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c015_008.

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Length: 27 pages JEL Classification: Endogenous Innovation, Resource Scarcity, Population Growth, Fertility Choices
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:deg:conpap:c015_008
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  1. Jakob B. Madsen & EPRU & FRU, 2007. "Semi-Endogenous Versus Schumpeterian Growth Models: Testing The Knowledge Production Function Using International Data," Monash Economics Working Papers 26-07, Monash University, Department of Economics.
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  12. Galor, Oded & Weil, David, 1998. "Population, Technology and Growth: From the Malthusian Regime to the Demographic Transition," CEPR Discussion Papers 1981, C.E.P.R. Discussion Papers.
  13. Pietro Peretto & Sjak Smulders, 2002. "Technological Distance, Growth And Scale Effects," Economic Journal, Royal Economic Society, vol. 112(481), pages 603-624, July.
  14. Madsen, Jakob & Ang, James & Banerjee, Rajabrata, 2010. "Four Centuries of British Economic Growth: The Roles of Technology and Population," MPRA Paper 23510, University Library of Munich, Germany.
  15. Pietro F. Peretto, 2010. "Is the 'Curse of Natural Resources' Really a Curse?," Working Papers 10-18, Duke University, Department of Economics.
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  19. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany.
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  22. Wang, Ping & Yip, Chong K & Scotese, Carol A, 1994. "Fertility Choice and Economic Growth: Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 255-66, May.
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  24. Ang, James & Madsen, Jakob, 2009. "Can Second-Generation Endogenous Growth Models Explain The Productivity Trends and Knowledge Production In the Asian Miracle Economies?," MPRA Paper 17543, University Library of Munich, Germany.
  25. Pietro Peretto & Michelle Connolly, 2007. "The Manhattan Metaphor," Journal of Economic Growth, Springer, vol. 12(4), pages 329-350, December.
  26. Peretto, Pietro F., 1996. "Technological Change and Population Growth," Working Papers 96-28, Duke University, Department of Economics.
  27. Edward Barbier, 1999. "Endogenous Growth and Natural Resource Scarcity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(1), pages 51-74, July.
  28. Reuveny, Rafael & Decker, Christopher S., 2000. "Easter Island: historical anecdote or warning for the future?," Ecological Economics, Elsevier, vol. 35(2), pages 271-287, November.
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