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Maximin-optimal sustainable growth with nonrenewable resource and externalities

  • Andrei V. Bazhanov

I offer an approach linking a welfare criterion to the “sustainable development opportunities” of the economy. This implies a dependence of a criterion on the information about the current state. I consider the problem for the Dasgupta-Heal-Solow-Stiglitz model with externalities. The economy-linked criterion is constructed on an example of the maximin principle applied to a hybrid level-growth measure. This measure includes as special cases the conventional measures of consumption level and percent change as a measure of growth. The hybrid measure or geometrically weighted percent can be used for measuring sustainable growth as an alternative to percent. The closed form solutions are obtained for the optimal paths including the paths, dynamically consistent with the updates in reserve estimates.

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Paper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2008_11.

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Length: 44 pages
Date of creation: 21 Oct 2008
Date of revision:
Handle: RePEc:eei:rpaper:eeri_rp_2008_11
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  1. Christian Groth & Karl-Josef Koch & Thomas Steger, 2006. "Rethinking the Concept of Long-Run Economic Growth," CESifo Working Paper Series 1701, CESifo Group Munich.
  2. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-79, May.
  3. Bazhanov, Andrei, 2008. "Inconsistency between a criterion and the initial conditions," MPRA Paper 6792, University Library of Munich, Germany.
  4. Tjalling C. Koopmans, 1962. "On Flexibility of Future Preference," Cowles Foundation Discussion Papers 150, Cowles Foundation for Research in Economics, Yale University.
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  8. Hueting, Roefie, 1990. "The Brundtland report : A matter of conflicting goals," Ecological Economics, Elsevier, vol. 2(2), pages 109-117, June.
  9. Bazhanov, Andrei, 2006. "Decreasing of Oil Extraction: Consumption behavior along transition paths," MPRA Paper 469, University Library of Munich, Germany.
  10. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880 Elsevier.
  11. Bazhanov, Andrei V., 2007. "The transition to an oil contraction economy," Ecological Economics, Elsevier, vol. 64(1), pages 186-193, October.
  12. James Konow, 2003. "Which Is the Fairest One of All? A Positive Analysis of Justice Theories," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1188-1239, December.
  13. Bazhanov, Andrei, 2008. "Sustainable growth: Compatibility between criterion and the initial state," MPRA Paper 9914, University Library of Munich, Germany.
  14. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, vol. 66(5), pages 845-57, December.
  15. Bazhanov, Andrei, 2006. "The peak of oil extraction and a modified maximin principle," MPRA Paper 14775, University Library of Munich, Germany, revised 12 Feb 2007.
  16. John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
  17. John C. V. Pezzey, 2001. "Sustainability Policy and Environmental Policy," Economics and Environment Network Working Papers 0104, Australian National University, Economics and Environment Network.
  18. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
  19. Leininger, Wolfgang, 1985. "Rawls' Maximin Criterion and Time-Consistency: Further Results," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 505-13, July.
  20. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 730-742, August.
  21. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  22. Gérard Gaudet, 2007. "Natural resource economics under the rule of Hotelling," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1033-1059, November.
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