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Inter-generational distribution of resources in a model of economic growth: Taking the land vs. food trade-off into account

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  • Voosholz, Frauke

Abstract

This paper considers a model with three overlapping generations of which only the middle one is able to work. There is a trade-off between food and bio-fuel pro- duction. We try to study this trade-off, its influence on economic growth and on resource consumption. The paper should state that even, if the current generation has the total autonomy of decision about the usage of all resources, they will never use them completely. The memebers of the current generation will always leave some resources for production because in the phase of retirement they depend on the income of the next generation, the latter paying back the credit obtained when beeing young. Furthermore, it states that as long as land is an essential input for producing the final product (including food) the amount of land devoted to bio-fuel production will not raise endlessly. The pure consumption loan model by Samuelson (1958) serves as basis for our Overlapping-Generations-Model, which we will integrate into a model of endogenous economic growth with resources, exogenous technical progress and land as a further input. For realization of the optimal consumption pattern, which leads to the maximum of utility, individuals have to make four decisions. They have to commit themselves on the exploitation rate of the non-renewable resource and on the amount of renewable resource used for production. Coincidentally, the allocation of land, necessary for food production and for renewable resource regeneration, and the amount of leisure time devoted for resource production have to be determined. The results are confirmed by numerical examples and will be reviewed by empirical data.

Suggested Citation

  • Voosholz, Frauke, 2013. "Inter-generational distribution of resources in a model of economic growth: Taking the land vs. food trade-off into account," CAWM Discussion Papers 70, University of Münster, Center of Applied Economic Research Münster (CAWM).
  • Handle: RePEc:zbw:cawmdp:70
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    References listed on IDEAS

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    1. Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 1999. "Social Security in an Overlapping Generations Economy with Land," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 638-665, July.
    2. Agnani, Betty & Gutierrez, Maria-Jose & Iza, Amaia, 2005. "Growth in overlapping generation economies with non-renewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 50(2), pages 387-407, September.
    3. Koskela, Erkki & Ollikainen, Markku & Puhakka, Mikko, 2002. "Renewable Resources in an Overlapping Generations Economy Without Capital," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 497-517, May.
    4. Duranton, Gilles, 2001. "Endogenous labor supply, growth and overlapping generations," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 295-314, March.
    5. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
    6. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    7. repec:spo:wpecon:info:hdl:2441/8712 is not listed on IDEAS
    8. Gerlagh, Reyer & Keyzer, Michiel A., 2001. "Sustainability and the intergenerational distribution of natural resource entitlements," Journal of Public Economics, Elsevier, vol. 79(2), pages 315-341, February.
    9. 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.
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    11. Philippe Weil, 2008. "Overlapping Generations: The First Jubilee," Journal of Economic Perspectives, American Economic Association, vol. 22(4), pages 115-134, Fall.
    12. Jeffrey A. Krautkraemer & JRaymond G. Batina, 1999. "On Sustainability and Intergenerational Transfers with a Renewable Resource," Land Economics, University of Wisconsin Press, vol. 75(2), pages 167-184.
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    More about this item

    Keywords

    economic growth; overlapping generations; non-renewable resources; renewable resources; land vs. food trade-off;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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