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Resource depletion in a Ramsey economy with subsistence consumption, exogenous technical change and capital depreciation: A full characterization

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  • Antony, Jürgen
  • Klarl, Torben

Abstract

This contribution is concerned with efficient use of a resources if households are characterized by Stone-Geary preferences with a minimum subsistence level of consumption. We provide a closed form solution for the case of Cobb-Douglas production with constant returns to scale in reproducible capital and effective resource input. The model allows for exogenous technical change and depreciation of reproducible capital. The closed form solution exists in terms of the Gaussian hypergeometric function. For some constellations of the model parameters, the economy asymptotically approaches the generalized Hartwick's investment rule. We calibrate our model to analyze the existence of a solution and the dynamics for resource-rich low-income countries.

Suggested Citation

  • Antony, Jürgen & Klarl, Torben, 2019. "Resource depletion in a Ramsey economy with subsistence consumption, exogenous technical change and capital depreciation: A full characterization," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203640, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc19:203640
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    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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