Maximin-optimal sustainable growth in a resource-based imperfect economy

Bazhanov, Andrei (2008): Maximin-optimal sustainable growth in a resource-based imperfect economy.

Abstract

I offer an approach linking a welfare criterion to the opportunities for sustainable development in an imperfect economy. The approach implies a dependence of the criterion on the economy's current state. The economy-linked criterion is constructed using an example with the maximin principle applied to a hybrid level-growth measure. This measure includes as special cases the conventional measures of consumption level and percent change as a measure of growth. The hybrid measure or geometrically weighted percent can be used for measuring sustainable growth as an alternative to percent. The problem is considered for the Dasgupta-Heal-Solow-Stiglitz model. Closed form solutions are obtained for the optimal paths including the paths dynamically consistent with the updates in reserve estimates.

• Item Type: MPRA Paper
• Language: English
• Keywords: imperfect economy; endogenous preferences; essential nonrenewable resource; geometrically weighted percent; normative resource peak
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q38 - Government Policy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products

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