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Growth and convergence in a model with renewable and non-renewable resources: existence, transitional dynamics, and empirical evidence

  • Manh-Hung Nguyen


    (Toulouse School of Economics, LERNA-INRA)

  • Phu Nguyen Van


    (BETA, CNRS and Université de Strasbourg)

This paper studies an optimal endogenous growth model using physical capital, labor and two kinds of natural resources in the final goods sector and employing labor to accumulate knowledge. Based on results in calculus of variations, a direct proof of existence of optimal solution is provided. Analytical solutions for the planner case and the balanced growth paths are found for a specific CRRA utility and Cobb-Douglas production function. Transitional dynamics to the steady state from the theoretical model are used to derive three convergence equations of output intensity growth rate, exhaustible resource growth rate and renewable growth rate, which are tested based on data on production and energy consumption in 27 OECD countries.

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Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 07.

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Length: 30 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:dpc:wpaper:0711
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  1. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
  2. Christian Groth, 2000. "Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth?," Econometric Society World Congress 2000 Contributed Papers 1480, Econometric Society.
  3. Tsur, Yacov & Zemel, Amos, 2003. "Optimal transition to backstop substitutes for nonrenewable resources," Journal of Economic Dynamics and Control, Elsevier, vol. 27(4), pages 551-572, February.
  4. Grimaud, André & Rougé, Luc, 2007. "Environment, Directed Technical Change and Economic Policy," IDEI Working Papers 384, Institut d'Économie Industrielle (IDEI), Toulouse.
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  6. Graciela Chichilnisky, 1981. "Existence and Characterization of Optimal Growth Paths Including Models with Non-Convexities in Utilities and Technologies," Review of Economic Studies, Oxford University Press, vol. 48(1), pages 51-61.
  7. Hippolyte d’Albis & Pascal Gourdel & Cuong Le Van, 2008. "Existence of solutions in continuous-time optimal growth models," Economic Theory, Springer, vol. 37(2), pages 321-333, November.
  8. Bretschger, Lucas, 2005. "Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?," Ecological Economics, Elsevier, vol. 54(2-3), pages 148-163, August.
  9. 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.
  10. Peter Mulder & Henri L.F. de Groot, 2004. "Sectoral Energy- and Labour-Productivity Convergence," Tinbergen Institute Discussion Papers 04-003/3, Tinbergen Institute.
  11. Jakub, GROWIEC & Ingmar, SCHUMACHER, 2006. "On Technical Change in the Elasticities of Resource Inputs," Discussion Papers (ECON - Département des Sciences Economiques) 2006031, Université catholique de Louvain, Département des Sciences Economiques.
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  13. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
  14. Miketa, Asami & Mulder, Peter, 2005. "Energy productivity across developed and developing countries in 10 manufacturing sectors: Patterns of growth and convergence," Energy Economics, Elsevier, vol. 27(3), pages 429-453, May.
  15. Tahvonen, Olli & Salo, Seppo, 2001. "Economic growth and transitions between renewable and nonrenewable energy resources," European Economic Review, Elsevier, vol. 45(8), pages 1379-1398, August.
  16. repec:hal:journl:halshs-00177269 is not listed on IDEAS
  17. Groth, Christian & Schou, Poul, 2007. "Growth and non-renewable resources: The different roles of capital and resource taxes," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 80-98, January.
  18. Gerlagh, Reyer & van der Zwaan, Bob, 2003. "Gross world product and consumption in a global warming model with endogenous technological change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 35-57, February.
  19. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  20. Grimaud, André & Rougé, Luc, 2003. "Polluting Non-Renewable Resources, Innovation and Growth : Welfare and Environmental Policy," IDEI Working Papers 206, Institut d'Économie Industrielle (IDEI), Toulouse.
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