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Investment and resource policy under a modified Hotelling rule

Bazhanov, Andrei (2011): Investment and resource policy under a modified Hotelling rule.

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Abstract

An extensive literature shows the importance of investment policy for sustainability of resource-based economies. The approaches of these studies are mostly based on theoretical results that examine the role of investments in a competitive optimizing economy. This paper extends some of these results by considering the dependence of current consumption change on investment under distortions causing modification of the standard Hotelling rule (HR). This extension implies that resource policy in the presence of the distortions can be more important for sustainability than under the standard HR. The examples of the analysis for distorted resource-based economies are provided.

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