Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value
This paper studies the undiscounted utilitarian optimal paths of the canonical Dasgupta-Heal-Solow model when the stock of natural capital is a direct argument of well-being, besides consumption. We use a Keynes-Ramsey rule wich yields a generalization of Hartwick's rule: if society has a zero discount rate but is ready to accept intertemporal substitution, net investment should not be zero as in the maximin case but should be positive, its level depending on the distance between the current and the long run bliss level of utility. We characterize solutions in the Cobb-Douglas utility and production case, and analyse the influence of the intertemporal elasticity of substitution on the time profile of the optimal paths. We show that, in the Cobb-Douglas case, the ratio of the values of the resource and capital stocks remains constant along the optimal path, and is independent of initial conditions
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- Antoine d'Autume & Katheline Schubert, 2008.
"Hartwick's rule and maximin paths when the exhaustible resource has an amenity value,"
Documents de travail du Centre d'Economie de la Sorbonne
v08031, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- d'Autume, Antoine & Schubert, Katheline, 2008. "Hartwick's rule and maximin paths when the exhaustible resource has an amenity value," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 260-274, November.
- Antoine D'Autume & Katheline Schubert, 2008. "Hartwick's rule and maximin paths when the exhaustible resource has an amenity value," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00308793, HAL.
- Antoine D'Autume & Katheline Schubert, 2008. "Hartwick's rule and maximin paths when the exhaustible resource has an amenity value," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00275765, HAL.
- R. M. Solow, 1973.
"Intergenerational Equity and Exhaustable Resources,"
103, Massachusetts Institute of Technology (MIT), Department of Economics.
- R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
- Mitra, Tapan, 1980. "On Optimal Depletion of Exhaustible Resources: Existence and Characterization Results," Econometrica, Econometric Society, vol. 48(6), pages 1431-50, September.
- Hartwick, John M, 1977.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
American Economic Review,
American Economic Association, vol. 67(5), pages 972-74, December.
- John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
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