Impatience and Intergenerational Equity in a Model of Sustainable Growth
We argue that intergenerational neutrality has been prematurely excluded from the dialogue on sustainable growth. By incorporating Burton’s distinction between intragenerational and intergenerational discounting into a model suitable for analyzing sustainability issues, we are able to accommodate some of the underlying concerns. We show that in an economy with a renewable resource, eschewing intergenerational discounting leads to the implication of a sustained growth path, without the necessity of a sustainability constraint. We find that green net national product remains constant along the optimal approach path to golden rule consumption. This avoids the paradox that maximizing sustainable income leads to unsustained consumption and income.
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- Burton Peter S., 1993.
"Intertemporal Preferences and Intergenerational Equity Considerations in Optimal Resource Harvesting,"
Journal of Environmental Economics and Management,
Elsevier, vol. 24(2), pages 119-132, March.
- Burton, P.S., 1991. "Intertemporal Preferences and Intergenerational Equity Considerations in Optimal Resource Harvesting," Department of Economics at Dalhousie University working papers archive 91-06, Dalhousie, Department of Economics.
- M. L. Weitzman, 1974.
"On the Welfare Significance of National Product in Dynamic Economy,"
125, Massachusetts Institute of Technology (MIT), Department of Economics.
- Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 90(1), pages 156-162.
- Olson, Mancur & Bailey, Martin J, 1981. "Positive Time Preference," Journal of Political Economy, University of Chicago Press, vol. 89(1), pages 1-25, February.
- Endress, Lee H. & Roumasset, James A. & Zhou, Ting, 2005. "Sustainable growth with environmental spillovers," Journal of Economic Behavior & Organization, Elsevier, vol. 58(4), pages 527-547, December.
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