The dependence of the potential sustainability of a resource economy on the initial state: a comparison of models using the example of Russian oil extraction

Bazhanov, Andrei (2011): The dependence of the potential sustainability of a resource economy on the initial state: a comparison of models using the example of Russian oil extraction. Published in: The Journal of the New Economic Association No. 12 (20 December 2011): pp. 1-20.

Abstract

The studies of the International Monetary Fund offer a model for recommending sustainable budget policy to oil-exporting countries including Russia. The model does not contain any resource as a factor of production and assumes that Russian oil reserves will be exhausted by the middle of the 21st century. The current paper examines the sustainability of open and closed models, which are calibrated on Russia's data and include a resource as a factor of production. The open-model case shows that monotonic economic growth is impossible given the current state of the Russian economy. This paper offers an approach for estimating changes that improve long-term sustainability.

• Item Type: MPRA Paper
• Language: English
• Keywords: nonrenewable resource; weak sustainability; open imperfect economy; Russian oil extraction
• 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 > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products

References

Andreeva A.A., Bazhanov A.V. (2007). Stsenarii perekhoda k ustojchivym tempam dobychi nefti v Rossii // MPRA Paper 5343 (In Russian).

Arrow K.J., Dasgupta P., Mäler, K.G. (2003). Evaluating projects and assessing sustainable development in imperfect economies // Environmental and Resource Economics. 26, 647-685.

Asheim G.B. (2005). Intergenerational ethics under resource constraints // Swiss Journal of Economics and Statistics. 141(3), 313-330.

Asheim G.B. (2010). Intergenerational equity // Annual Review of Economics. 2, 197-222.

Asheim G.B., Buchholz W., Withagen C. (2003) The Hartwick rule: myths and facts // Environmental and Resource Economics. 25, 129-150.

Asheim G.B., Buchholz W., Hartwick J.M., Mitra T., Withagen C. (2007). Constant savings rates and quasi-arithmetic population growth under exhaustible resource constraints // Journal of Environmental Economics and Management. 53, 213-229.

Barnett S., Ossowski R.J. (2003). Operational aspects of fiscal policy in oil-producing countries. In Fiscal Policy Formulation and Implementation in Oil-Producing Countries, edited by Davis J. M., Ossowski R. J., Fedelino A. Washington: International Monetary Fund.

Barro R.J., Sala-i-Martin X. (2003). Economic Growth. Cambridge, Mass.: MIT Press.

Bazhanov A.V. (2006). Variatsionnyje printsipy modelirovanija v resursnoj economike // Vestnik DVO RAN. 6, 5-13 (In Russian).

Bazhanov A. V. (2007). The transition to an oil contraction economy // Ecological Economics. 64(1), 186-193.

Bazhanov A.V. (2008). Sustainable growth in a resource-based economy: the extraction-saving relationship // MPRA Paper No. 23299.

Bazhanov A.V. (2009). Maximin-optimal sustainable growth in a resource-based imperfect economy // MPRA Paper No. 19258.

Bazhanov A.V. (2010). Sustainable growth: compatibility between a plausible growth criterion and the initial state // Resources Policy. 35(2), 116–125.

Bazhanov A.V. (2011). A closed-form solution to Stollery's problem with damage in utility // Computational Economics (in print). DOI 10.1007/s10614-010-9249-4.

Bazhanov A.V., Belyaev A.A. (2009). Adekvatnost' zakrytoj modeli dlja rossijskoj economiki v zadache sravnitel'nogo analiza Energeticheskoj strategii Rossii // MPRA Paper 15109 (In Russian).

Bazhanov A.V., Tyukhov I.I. (2008). Energeticheskaja strategija Rossii i razvitie vozobnovlyaemoj energetiki // MPRA Paper 26704 (In Russian).

Brander J.A. (2010). Presidential address: innovation in retrospect and prospect // Canadian Journal of Economics. 43(4), 1087-1121.

Brander J.A., Taylor M.S. (1998). The simple economics of Easter Island: a Ricardo-Malthus model of renewable resource use // American Economic Review 88(1), 119-138.

Buchholz W., Dasgupta S., Mitra T. (2005). Intertemporal equity and Hartwick's rule in an exhaustible resource model. Scandinavian Journal of Economics. 107(3), 547-561.

CB RF (2009). Mezhdunarodnaya investitsionnaya positsiya Rossijskoj Federatsii. <http://www.cbr.ru/search/print.asp?File=/statistics/credit_statistics/iip_rf.htm> (In Russian. Accessed: November 2010).

Dasgupta P., Eastwood R., Heal G. (1978). Resource management in a trading economy // The Quarterly Journal of Economics. 92(2), 297-306.

Dasgupta P., Heal G. (1974). The optimal depletion of exhaustible resources // Review of Economic Studies. 41, 3-28.

Dasgupta P., Heal G. (1979). Economic theory and exhaustible resources. Cambridge, England: Cambridge University Press.

ES-2030 (2010). Energy Strategy of Russia for the period up to 2030. Moscow: Institute of Energy Strategy. <http://www.energystrategy.ru/projects/docs/ES-2030_(Eng).pdf> (Accessed: November 2010).

FTS (2009). Eksport Rossii vazhnejshikh tovarov v 2008 godu. Federalnaya Tamozhennaya Sluzhba. <http://www.customs.ru/ru/stats/arhiv-stats-new/trfgoods/popup.php?id286=508> (In Russian. Accessed: November 2010).

Hamilton K., Hartwick J.M. (2005). Investing exhaustible resource rents and the path of consumption // Canadian Journal of Economics. 38(2), 615-621.

Hamilton K., Withagen C. (2007). Savings growth and the path of utility // Canadian Journal of Economics. 40(2), 703-713.

Hammond P. (1993). Is there anything new in the concept of sustainable development? mimeo, Stanford University.

Hartwick J.M. (1977). Intergenerational equity and the investing of rents from exhaustible resources // American Economic Review 67(5), 972-974.

Homer S., Sylla R. E. (1996). A history of interest rates. New Brunswick, N.J.: Rutgers University Press.

Jafarov E., Takizawa H., Zebregs H., Balassone F. (2006). Russian Federation. Selected issues. IMF Country Report No 06/430. Washington: International Monetary Fund.

Jakobsson K., Söderbergh B., Höök M., Aleklett K. (2009). How reasonable are oil production scenarios from public agencies? // Energy Policy. 37(11), 4809-4818.

Lipsey R.G., Carlaw K.I. (2004). Total factor productivity and the measurement of technological change // Canadian Journal of Economics. 37(4), 1118-1150.

McKibben B. (2005). The Cuba Diet: what will you be eating when the revolution comes? // Harper's Magazine. April, 61-69.

Meadows D.H., Meadows D.L., Randers J., Behrens III W.W. (1972). The Limits to Growth. New York: Universe Books.

Mitra T. (1983). Limits on population growth under exhaustible resource constraints // International Economic Review. 24(1), 155-168.

Neumayer E. (1999). Weak versus strong sustainability: exploring the limits of two opposing paradigms. Cheltenham, UK: Edward Elgar.

Neumayer E. (2000): Scarce or abundant? The economics of natural resource availability // Journal of Economic Surveys. 14(3), 307-329.

Nordhaus W.D., Boyer J. (2000). Warming the world: economic models of global warming. Cambridge, Mass.: MIT Press.

OGJ (2009). Worldwide look at reserves and production // Oil & Gas Journal. 107(47), 20-21.

Pezzey J.C.V. (1992). Sustainable development concepts: an economic analysis // World Bank environment paper No. 2. Washington: The World Bank.

Pezzey J.C.V. (2004a). Exact measures of income in a hyperbolic economy // Environment and Development Economics. 9, 473-484.

Pezzey J.C.V. (2004b). One-sided sustainability tests with amenities, and changes in technology, trade and population // Journal of Environmental Economics and Management. 48, 613-631.

Pezzey J.C.V., Withagen C. (1998). The rise, fall and sustainability of capital-resource economies // Scandinavian Journal of Economics. 100(2), 513-527.

Polterovich V.M., Popov V.V., Tonis A.C. (2007). Economic Policy, quality of institutions, and mechanisms of resource curse. Moscow: State University - Higher School of Economics (in Russian).

Rosstat (2010). Sotsialno-economicheskije pokazateli Rossijskoi Federatsii v 1991-2009 gg. <http://www.gks.ru/wps/wcm/connect/rosstat/rosstatsite/main/publishing/catalog> (In Russian. Accessed: February 2011).

Solow R.M. (1974). Intergenerational equity and exhaustible resources // Review of Economic Studies. 41, 29-45.

Solow R.M. (1986). On the intergenerational allocation of natural resources // Scandinavian Journal of Economics. 88(1), 141-149.

Stiglitz J. (1974). Growth with exhaustible natural resources: efficient and optimal growth paths // Review of Economic Studies. 41, 123-137.

Stollery K.R. (1998). Constant utility paths and irreversible global warming // Canadian Journal of Economics. 31, 730-742.

Suzuki H. (1976). On the possibility of steadily growing per capita consumption in an economy with a wasting and non-replenishable resource // Review of Economic Studies. 43, 527-535.

Takayama A. (1980). Optimal technical progress with exhaustible resources. In: Kemp M., Long N.V. (Eds). Exhaustible Resources, Optimality and Trade, New York: North-Holland, 95-110.

UN (2010). Human development report 2010. The real wealth of nations: pathways to human development. New York: UNDP.

van der Ploeg F. (2011). Rapacious resource depletion, excessive investment and insecure property rights: a puzzle // Environmental and Resource Economics. 48, 105-128.

van der Ploeg F., Venables A.J. (2011). Harnessing windfall revenues: optimal policies for resource-rich developing economies // Economic Journal. 121, 1-30.

Watson M.W. (1993). Measures of fit for calibrated models // Journal of Political Economy. 101(6), 1011-1041.

WCED (1987). World Commission on Environment and Development. Our Common Future. Oxford/New York: Oxford University Press.