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Growth and convergence in a model with renewable and non-renewable resources: existence, transitional dynamics, and empirical evidence

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  • Nguyen, Manh-Hung
  • Nguyen-Van, Phu

Abstract

This paper studies an optimal endogenous growth model using physical capital, labor and two kinds of natural resources in the final goods sector and employing labor to accumulate knowledge. Based on results in calculus of variations, a direct proof of existence of optimal solution is provided. Analytical solutions for the planner case and the balanced growth paths are found for a specific CRRA utility and Cobb-Douglas production function. Transitional dynamics to the steady state from the theoretical model are used to derive three convergence equations of output intensity growth rate, exhaustible resource growth rate and renewable growth rate, which are tested based on data on production and energy consumption in 27 OECD countries.
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Suggested Citation

  • Nguyen, Manh-Hung & Nguyen-Van, Phu, 2010. "Growth and convergence in a model with renewable and non-renewable resources: existence, transitional dynamics, and empirical evidence," TSE Working Papers 10-210, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:23862
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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