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

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  • Pietro Peretto
  • Simone Valente

Abstract

We study the interactions between technological change, resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility. There exists a pseudo-Malthusian equilibrium in which population is constant and income grows exponentially: 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. If labor and resources are substitutes in production, income and fertility dynamics are self-balancing and the pseudo-Malthusian equilibrium is the global attractor of the system. If labor and resources are complements, income and fertility dynamics are self-reinforcing and drive the economy towards either demographic explosion or human extinction. Introducing a minimum resource requirement, we obtain a second steady state implying constant population even under complementarity. The standard result of exponential population growth appears as a rather special case of our model.

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  • Pietro Peretto & Simone Valente, 2011. "Growth on a Finite Planet: Resources, Technology and Population in the Long Run," Working Papers 11-12, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:11-12
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    Cited by:

    1. Halvor Mehlum & Ragnar Torvik & Simone Valente, 2013. "China’s Savings Multiplier," Working Papers No 4/2013, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    2. Pietro Peretto & Simone Valente, 2015. "Growth on a finite planet: resources, technology and population in the long run," Journal of Economic Growth, Springer, vol. 20(3), pages 305-331, September.
    3. Bruno Lanz & Simon Dietz & Timothy Swanson, 2017. "Global Population Growth, Technology, And Malthusian Constraints: A Quantitative Growth Theoretic Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 973-1006, August.
    4. Bruno Lanz & Simon Dietz & Timothy Swanson, 2016. "Economic growth and agricultural land conversion under uncertain productivity improvements in agriculture," CIES Research Paper series 43-2016, Centre for International Environmental Studies, The Graduate Institute.
    5. He, Qichun & Zou, Heng-fu, 2016. "Does inflation cause growth in the reform-era China? Theory and evidence," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 470-484.
    6. Lafuite, A.-S. & Loreau, M., 2017. "Time-delayed biodiversity feedbacks and the sustainability of social-ecological systems," Ecological Modelling, Elsevier, vol. 351(C), pages 96-108.
    7. Andreas Schaefer, 2016. "Survival to Adulthood and the Growth Drag of Pollution," CER-ETH Economics working paper series 16/241, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    8. Attar, M. Aykut, 2013. "Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric," MPRA Paper 47275, University Library of Munich, Germany.
    9. Colin Davis & Ken-ichi Hashimoto, 2016. "Innovation and Manufacturing Offshoring with Fully Endogenous Productivity Growth," Discussion Papers 1636, Graduate School of Economics, Kobe University.
    10. Liu, Xiying, 2015. "Optimal population and policy implications," ISU General Staff Papers 201501010800005546, Iowa State University, Department of Economics.
    11. Casey, Gregory, 2017. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," MPRA Paper 76416, University Library of Munich, Germany.

    More about this item

    Keywords

    Endogenous Innovation; Resource Scarcity; Population Growth; Fertility Choices;

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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