Sriket, Hongsilp and Suen, Richard M. H. (2021): Sources of Economic Growth in Models with NonRenewable Resources.
This is the latest version of this item.

PDF
MPRA_paper_106221.pdf Download (332kB)  Preview 
Abstract
This paper reexamines the conditions under which endogenous economic growth can emerge in neoclassical models with nonrenewable resources. Unlike most of the existing studies which focus exclusively on CobbDouglas production function, our analysis is based on a general specification. We formally prove that endogenous growth can emerge only under the "knifeedge" condition of a unitary elasticity of substitution between labour input and resource input. If this elasticity is not equal to one (as suggested by empirical evidence), then longterm economic growth is entirely driven by an exogenous technological factor. We also explore the implications of this on resource taxation.
Item Type:  MPRA Paper 

Original Title:  Sources of Economic Growth in Models with NonRenewable Resources 
Language:  English 
Keywords:  NonRenewable Resources; Endogenous Growth; KnifeEdge Condition; Elasticity of Substitution. 
Subjects:  O  Economic Development, Innovation, Technological Change, and Growth > O1  Economic Development > O13  Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products O  Economic Development, Innovation, Technological Change, and Growth > O4  Economic Growth and Aggregate Productivity > O41  One, Two, and Multisector Growth Models Q  Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3  Nonrenewable Resources and Conservation > Q32  Exhaustible Resources and Economic Development 
Item ID:  106221 
Depositing User:  Richard M. H. Suen 
Date Deposited:  22 Feb 2021 10:58 
Last Modified:  22 Feb 2021 10:58 
References:  Agnani, B., M. Gutiérrez and A. Iza, (2005) "Growth in Overlapping Generation Economies with NonRenewable Resources," Journal of Environmental Economics and Management, vol. 50, pp.387407. Arrow, K.J., H.B. Chenery, B.S. Minhas and R.M. Solow, (1961) "CapitaLabor Substitution and Economic Efficiency," Review of Economics and Statistics, vol. 43, pp.225250. Barbier, E.B., (1999) "Endogenous Growth and Natural Resource Scarcity," Environmental and Resource Economics, vol. 14, pp.5174. Blackorby, C., and R.R. Russell, (1976) "Functional Structure and the Allen Partial Elasticities of Substitution: An Application of Duality Theory," Review of Economic Studies, vol. 43, pp.285291. Boadway, R., and M. Keen, (2010) "Theoretical Perspectives on Resource Tax Design," in The Taxation of Petroleum and Minerals: Principles, Problems and Practice, edited by C. McPherson, M. Keen and P. Daniel. Published by Taylor & Francis. Bornhorst, F., S. Gupta and J. Thornton, (2009) "Natural Resource Endowments and the Domestic Revenue Effort," European Journal of Political Economy, vol. 25, pp.439446. Bugajewski, D., and P. Maćkowiak, (2015) "On KnifeEdge Conditions with Unbounded Growth," Journal of Macroeconomics, vol. 45, pp.274283. Dasgupta, P., and G. Heal, (1974) "The Optimal Depletion of Exhaustible Resources," Review of Economic Studies, vol. 41, pp. 328. Feng, G., and A. Serletis, (2008) "Productivity Trends in U.S. Manufacturing: Evidence from the NQ and AIM Cost Functions," Journal of Econometrics, vol. 142, pp.281311. Gaudet, G., and P. Lasserre, (2015) "The Taxation of Nonrenewable Natural Resources," in Handbook on the Economics of Natural Resources, ed. R. Halvorsen and D.F. Layton. (Edward Elgar Publishing Ltd). Grimaud, A., and L. Rougé, (2003) "NonRenewable Resources and Growth with Vertical Innovations: Optimum, Equilibrium and Economic Policies," Journal of Environmental Economics and Management, vol. 45, pp.433453. Grossman, G.M., E. Helpman, E. Oberfield and Thomas Sampson, (2017) "Balanced Growth Despite Uzawa," American Economic Review, vol. 107, pp.12931312. Groth, C., and P. Schou, (2002) "Can NonRenewable Resources Alleviate the KnifeEdge Character of Endogenous Growth?" Oxford Economic Papers, vol. 54, pp.386411. Groth, C., and P. Schou, (2007) "Growth and NonRenewable Resources: The Different Roles of Capital and Resource Taxes," Journal of Environmental Economics and Management, vol. 53, pp.8098. Growiec, J., (2007) "Beyond the Linearity Critique: the KnifeEdge Assumption of SteadyState Growth," Economic Theory, vol. 31, pp.489499. Henningsen, A., G. Henningsen and E. van der Werf, (2019) "CapitalLabourEnergy Substitution in a Nested CES Framework: A Replication and Update of Kemfert (1998)," Energy Economics, vol. 82, p.1625. Jones, C.I., and D. Scrimgeour, (2008) "A New Proof of Uzawa's SteadyState Growth Theorem," Review of Economics and Statistics, vol. 90, pp.180182. Jones, L.E., and R.E. Manuelli, (1997) "The Sources of Growth," Journal of Economic Dynamics and Control, vol. 21, pp.75114. Kaldor, N., (1963) "Capital Accumulation and Economic Growth," in Proceedings of a Conference Held by the International Economics Association, ed. F.A. Lutz and D.C. Hague (London: Macmillan Publishers). Kemfert, C., (1998) "Estimated Substitution Elasticities of a Nested CES Production Function Approach for Germany," Energy Economics, vol. 20, pp.249264. Kemfert, C., and H. Welsch, (2000) "EnergyCapitalLabor Substitution and the Economic Effects of CO2 Abatement: Evidence for Germany," Journal of Policy Modeling, vol. 22, pp.641660. Leontief, W., (1947) "Introduction to a Theory of the Internal Structure of Functional Relationships," Econometrica, vol. 15, pp.361373. Mitra, T., (1983) "Limits on Population Growth under Exhaustible Resource Constraints," International Economic Review, vol. 24, pp.155168. Palivos, T., and G. Karagiannis, (2010) "The Elasticity of Substitution as an Engine of Growth," Macroeconomic Dynamics, vol. 14, pp.617628. Sato, K., (1967) "A TwoLevel ConstantElasticityofSubstitution Production Function," Review of Economic Studies, vol. 34, pp.201218. Schlicht, E., (2006) "A Variant of Uzawa's Theorem," Economics Bulletin, vol. 5, pp.15. Scholz, C.M., and G. Ziemes (1999) "Exhaustible Resources, Monopolistic Competition, and Endogenous Growth," Environmental and Resource Economics, vol. 13, pp.169185. Solow, R.M., (1974) "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, vol. 41, pp.2945. Stiglitz, J., (1974) "Growth with Exhaustible Natural Resources: Efficient and Optimal Growth Paths," Review of Economic Studies, vol. 41, pp.123137. Tirole, J., (1985) "Asset Bubbles and Overlapping Generations," Econometrica, vol. 53, pp.14991528. Uzawa, H., (1961) "Neutral Inventions and the Stability of Growth Equilibrium," Review of Economic Studies, vol. 28, pp.117124. van der Werf, E., (2008) "Production Functions for Climate Policy Modeling: An Empirical Analysis," Energy Economics, vol. 30, pp.29642979. 
URI:  https://mpra.ub.unimuenchen.de/id/eprint/106221 
Available Versions of this Item

Sources of Economic Growth in Models with NonRenewable Resources. (deposited 24 Oct 2019 08:52)
 Sources of Economic Growth in Models with NonRenewable Resources. (deposited 22 Feb 2021 10:58) [Currently Displayed]