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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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File URL: https://mpra.ub.uni-muenchen.de/27619/1/MPRA_paper_27619.pdf
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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. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586, November.
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  11. 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.
  12. 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.
  13. Bazhanov, Andrei, 2008. "Sustainable growth: The extraction-saving relationship," MPRA Paper 9911, University Library of Munich, Germany.
  14. John C. V. Pezzey, 2002. "Exact Measures of Income in a Hyperbolic Economy," Economics and Environment Network Working Papers 0203, Australian National University, Economics and Environment Network.
  15. 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.
  16. Dasgupta, Partha, 1974. "On some alternative criteria for justice between generations," Journal of Public Economics, Elsevier, vol. 3(4), pages 405-423, November.
  17. Mitra, Tapan, 1978. "Efficient growth with exhaustible resources in a neoclassical model," Journal of Economic Theory, Elsevier, vol. 17(1), pages 114-129, February.
  18. 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.
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  20. Kenneth Stollery, 1998. "Constant Utility Paths and Irreversible Global Warming," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 730-742, August.
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  22. Bazhanov, Andrei, 2008. "Sustainable growth in a resource-based economy: the extraction-saving relationship," MPRA Paper 12350, University Library of Munich, Germany.
  23. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
  24. Tjalling C. Koopmans, 1962. "On Flexibility of Future Preference," Cowles Foundation Discussion Papers 150, Cowles Foundation for Research in Economics, Yale University.
  25. 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.
  26. Geir B. Asheim & Wolfgang Buchholz & John M. Hartwick & Tapan Mitra & Cees A. Withagen, 2005. "Constant Savings Rates and Quasi-Arithmetic Population Growth under Exhaustible Resource Constraints," CESifo Working Paper Series 1573, CESifo Group Munich.
  27. Wolfgang Leininger, 1985. "Rawls' Maximin Criterion and Time-Consistency: Further Results," Review of Economic Studies, Oxford University Press, vol. 52(3), pages 505-513.
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