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On the Relation Between the Endogenous Growth Rate of the Economy and the Dynamics of Renewable Resources

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  • José Manuel Madeira Belbute

    (Department of Economics, University of Évora; CEFAGE-UE)

  • Paulo Brito

    (Department of Economics, Technical University of Lisbon; UECE)

Abstract

In this paper we study a simple endogenous growth model in which the two engines of growth are the exogenous technical progress in dematerialization and the accumulation of a renewable natural resource. The model is also labeled as been "endogenous" as the rate of growth of natural capital is endogenously determined and should lie between zero and the rate of technical progress. In this context, it is possible to combine permanent economic growth with permanent growth of the environmental asset. the endogenous rate of growth of the stock of natural resources is a positive function of the physical rate of regeneration (which will occur if consumption would be zero) and of the rate of technical progress. However, in order to assure sustainability, the former growth rate should be larger than zero but smaller than the later. Second, the output growth rate (which in our model is equal to the rate of consumption) should lie between the rate of technical progress and the sum of the rate of technical progress and the natural rate of regeneration. Therefore, even in the case in which the physical rate of renewal is mall, this will allow for unbounded growth. Third, in our simple model, there is no transitional dynamics.

Suggested Citation

  • José Manuel Madeira Belbute & Paulo Brito, 2009. "On the Relation Between the Endogenous Growth Rate of the Economy and the Dynamics of Renewable Resources," Economics Working Papers 07_2009, University of Évora, Department of Economics (Portugal).
    • Handle: RePEc:evo:wpecon:07_2009
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    File URL: http://hdl.handle.net/10174/8464
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    More about this item

    Keywords

    Endogenous growth; environmental preservation; habit-formation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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