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The Hartwick Rule : Myths and Facts

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Listed:
  • Asheim, G.B.
  • Buchholz, W.
  • Withagen, C.A.A.M.

Abstract

We consider the Hartwick rule for capital accumulation and resource depletion, provide semantic clarifications and investigate whether this rule indicates sustainability and requires substitutability between manmade and natural capital. In addition to shedding light on the meaning of the Hartwick rule by reviewing established results, we establish the following novel finding: The value of net investments being negative does not imply that utility is unsustainable. Throughout we make the assumption of a constant technology, without which the Hartwick rule does not apply.
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Suggested Citation

  • Asheim, G.B. & Buchholz, W. & Withagen, C.A.A.M., 2002. "The Hartwick Rule : Myths and Facts," Discussion Paper 2002-52, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:a4f96369-ea27-4f6c-882a-17546bfec317
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    References listed on IDEAS

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    1. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 551-556.
    2. Cass, David & Mitra, Tapan, 1991. "Indefinitely Sustained Consumption Despite Exhaustible Natural Resources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(2), pages 119-146, April.
    3. Hanley, Nick & Shogren, Jason & White, Ben, 2013. "Introduction to Environmental Economics," OUP Catalogue, Oxford University Press, edition 2, number 9780199568734.
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    5. Swapan Dasgupta & Tapan Mitra, 1999. "On the Welfare Significance of National Product for Economic Growth and Sustainable Development," The Japanese Economic Review, Japanese Economic Association, vol. 50(4), pages 422-442, December.
    6. Heal, Geoffrey M., 1993. "The optimal use of exhaustible resources," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880, Elsevier.
    7. Buchholz Wolfgang, 1980. "Intergenerational Equity, a Savings Investment Rule, and the Efficient Allocation of an Exhaustible Resource: Intergenerational Equity, a Savings Investment Rule, and the Efficient Allocation of an Ex," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 195(3), pages 271-274, March.
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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 972-974, December.
    12. Thomas Aronsson & Per-Olav Johansson, 1997. "Welfare Measurement, Sustainability and Green National Accounting," Books, Edward Elgar Publishing, number 1240.
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    More about this item

    Keywords

    natural resources; sustainable development; capital accumulation;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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