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Constant-utility paths in a resource-based economy

  • Bazhanov, Andrei

This paper analyzes a social planner's solution in a resource-based economy under a constant-utility criterion. The utility function includes social progress in a multiplicative form. The resulting paths of consumption include the patterns of growth that are conventionally used in the literature. This approach extends conventional link between the utilitarian criterion and the maximin for the cases with finite elasticity of marginal utility. The closed form solutions, derived for the Dasgupta-Heal-Solow-Stiglitz (DHSS) model, include the result of Solow (1974) and Hartwick (1977) as a specific case. The approach is applied to an example of a distorted resource-extracting economy under the requirement for smoothness of the paths with respect to historical data.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27619.

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Date of creation: 02 Aug 2010
Date of revision: 20 Dec 2010
Handle: RePEc:pra:mprapa:27619
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  1. Christian Groth & Karl-Josef Koch & Thomas M. Steger, 2006. "Rethinking the Concept of Long-Run Economic Growth," Discussion Papers 06-06, University of Copenhagen. Department of Economics.
  2. Asheim, Geir B. & Buchholz, Wolfgang & Hartwick, John M. & Mitra, Tapan & Withagen, Cees, 2005. "Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints," Memorandum 23/2005, Oslo University, Department of Economics.
  3. ALVAREZ-CUADRADO, Francisco & LONG, Ngo Van, 2007. "A Mixed Bentham-Rawls Criterion for Intergenerational Equity : Theory and Implications," Cahiers de recherche 06-2007, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  4. Kirk Hamilton & Giovanni Ruta & Liaila Tajibaeva, 2006. "Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(4), pages 517-533, August.
  5. Leininger, Wolfgang, 1985. "Rawls' Maximin Criterion and Time-Consistency: Further Results," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 505-13, July.
  6. Asheim, Geir B, 1988. "Rawlsian Intergenerational Justice as a Markov-Perfect Equilibrium in a Resource Technology," Review of Economic Studies, Wiley Blackwell, vol. 55(3), pages 469-83, July.
  7. Mitra, Tapan, 1978. "Efficient growth with exhaustible resources in a neoclassical model," Journal of Economic Theory, Elsevier, vol. 17(1), pages 114-129, February.
  8. 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.
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  10. Pezzey, John C.V., 2004. "Exact measures of income in a hyperbolic economy," Environment and Development Economics, Cambridge University Press, vol. 9(04), pages 473-484, August.
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  12. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Working Papers 2003.109, Fondazione Eni Enrico Mattei.
  13. 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.
  14. Kirk Hamilton & John Hartwick, 2005. "Investing exhaustible resource rents and the path of consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 615-621, May.
  15. Martinet, Vincent, 2007. "A step beside the maximin path: Can we sustain the economy by following Hartwick's investment rule?," Ecological Economics, Elsevier, vol. 64(1), pages 103-108, October.
  16. 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.
  17. Tjalling C. Koopmans, 1962. "On Flexibility of Future Preference," Cowles Foundation Discussion Papers 150, Cowles Foundation for Research in Economics, Yale University.
  18. Andrei Bazhanov, 2012. "A Closed-Form Solution to Stollery’s Problem with Damage in Utility," Computational Economics, Society for Computational Economics, vol. 39(4), pages 365-386, April.
  19. Bazhanov, Andrei, 2008. "Sustainable growth: The extraction-saving relationship," MPRA Paper 9911, University Library of Munich, Germany.
  20. Dasgupta, Partha, 1974. "On some alternative criteria for justice between generations," Journal of Public Economics, Elsevier, vol. 3(4), pages 405-423, November.
  21. Bazhanov, Andrei V., 2010. "Sustainable growth: Compatibility between a plausible growth criterion and the initial state," Resources Policy, Elsevier, vol. 35(2), pages 116-125, June.
  22. David Levhari & Nissan Liviatan, 1977. "Notes on Hotelling's Economics of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 177-92, May.
  23. Christian Groth & Karl-Josef Koch & Thomas Steger, 2010. "When economic growth is less than exponential," Economic Theory, Springer, vol. 44(2), pages 213-242, August.
  24. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
  25. Long, Ngo Van, 1975. "Resource extraction under the uncertainty about possible nationalization," Journal of Economic Theory, Elsevier, vol. 10(1), pages 42-53, February.
  26. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 730-742, August.
  27. 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.
  28. Geir B. Asheim, 2005. "Intergenerational Ethics under Resource Constraints," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 313-330, September.
  29. Mitra, Tapan, 1983. "Limits on Population Growth under Exhaustible Resource Constraints," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 155-68, February.
  30. Phelps, Edmund S & Riley, J G, 1978. "Rawlsian Growth: Dynamic Programming of Capital and Wealth for Intergeneration "Maximin" Justice," Review of Economic Studies, Wiley Blackwell, vol. 45(1), pages 103-20, February.
  31. Calvo, Guillermo A, 1978. "Some Notes on Time Inconsistency and Rawls' Maximin Criterion," Review of Economic Studies, Wiley Blackwell, vol. 45(1), pages 97-102, February.
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