Non-Renewable but Inexhaustible – Resources in an Endogenous Growth Model
This paper proposes an endogenous growth model with an essential non-renewable resource, where economic growth enables firms to invest in innovation in the extraction technology and to allocate more capital to resource extraction. Innovation in the extraction technology offsets the deterioration of ore qualities and keeps the production costs of the non-renewable resource constant. Aggregate output as well as production and use of the non-renewable resource increase exponentially. Our model explains the long-run trends of non-renewable resource prices and world production over more than 200 years. If historical trends in technological progress and in the deterioration of ore qualities continue, it is in the realm of possibility that non-renewable resources are de facto inexhaustible. Our results suggest that the industrialization in China and other emerging economies contributes to keeping non-renewable resource prices constant in the long run.
|Date of creation:||May 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Kurt-Schumacher-Str. 10 - D- 53113 Bonn|
Phone: +49-(0)228 / 91416-0
Fax: +49-(0)228 / 91416-55
Web page: http://www.coll.mpg.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nordhaus, William D, 1974. "Resources as a Constraint on Growth," American Economic Review, American Economic Association, vol. 64(2), pages 22-26, May.
- Pierre Lasserre & Pierre Ouellette, 1988.
"On Measuring and Comparing Total Factor Productivities in Extractive and Non-extractive Sectors,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 21(4), pages 826-34, November.
- Lasserre, P. & Ouellette, P., 1986. "On Measuring and Comparing Total Factor Productivities in Extractive and Non Extractive Sectors," Cahiers de recherche 8625, Universite de Montreal, Departement de sciences economiques.
- Lucas Bretschger & Sjak Smulders, 2007.
"Sustainable Resource Use and Economic Dynamics,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 36(1), pages 1-13, January.
- Acemoglu, Daron & Aghion, Philippe & Bursztyn, Leonardo & Hemous, David, 2010.
"The Environment and Directed Technical Change,"
762, Stockholm University, Institute for International Economic Studies.
- Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2009. "The Environment and Directed Technical Change," NBER Working Papers 15451, National Bureau of Economic Research, Inc.
- Acemoglu, Daron & Aghion, Philippe & Bursztyn, Leonardo & Hemous, David, 2011. "The Environment and Directed Technical Change," CEPR Discussion Papers 8660, C.E.P.R. Discussion Papers.
- Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2010. "The Environment and Directed Technical Change," Working Papers 2010.93, Fondazione Eni Enrico Mattei.
- Slade, Margaret E., 1982. "Trends in natural-resource commodity prices: An analysis of the time domain," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 122-137, June.
- Junsoo Lee & John A. List & Mark Strazicich, 2005.
"Nonrenewable Resource Prices: Deterministic or Stochastic Trends?,"
NBER Working Papers
11487, National Bureau of Economic Research, Inc.
- Lee, Junsoo & List, John A. & Strazicich, Mark C., 2006. "Non-renewable resource prices: Deterministic or stochastic trends?," Journal of Environmental Economics and Management, Elsevier, vol. 51(3), pages 354-370, May.
- Junsoo Lee & John A. List & Mark C. Strazicich, 2005. "Nonrenewable Resource Prices: Deterministic or Stochastic Trends?," Working Papers 05-20, Department of Economics, Appalachian State University.
- Managi, Shunsuke & Opaluch, James J. & Jin, Di & Grigalunas, Thomas A., 2004. "Technological change and depletion in offshore oil and gas," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 388-409, March.
- Eyal Dvir & Kenneth S. Rogoff, 2009. "Three Epochs of Oil," NBER Working Papers 14927, National Bureau of Economic Research, Inc.
- 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.
- Robert S. Pindyck, 1999.
"The Long-Run Evolutions of Energy Prices,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 2), pages 1-27.
- John Livernois, 2009. "On the Empirical Significance of the Hotelling Rule," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 3(1), pages 22-41, Winter.
- Cynthia Lin, C.-Y. & Wagner, Gernot, 2007. "Steady-state growth in a Hotelling model of resource extraction," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 68-83, July.
- Christian Groth, 2006. "A New-Growth Perspective on Non-Renewable Resources," Discussion Papers 06-26, University of Copenhagen. Department of Economics.
- James D. Hamilton, 2008.
"Understanding Crude Oil Prices,"
NBER Working Papers
14492, National Bureau of Economic Research, Inc.
- Fourgeaud, C. & Lenclud, B. & Michel, Ph., 1982. "Technological renewal of natural resource stocks," Journal of Economic Dynamics and Control, Elsevier, vol. 4(1), pages 1-36, November.
- Volker Steinbach & Friedrich-W. Wellmer, 2010. "Consumption and Use of Non-Renewable Mineral and Energy Raw Materials from an Economic Geology Point of View," Sustainability, MDPI, Open Access Journal, vol. 2(5), pages 1408, May.
- Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
- Grimaud, Andre & Rouge, Luc, 2003. "Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 433-453, March.
When requesting a correction, please mention this item's handle: RePEc:mpg:wpaper:2012_09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marc Martin)
If references are entirely missing, you can add them using this form.