Sources of Economic Growth in Models with Non-Renewable Resources

Sriket, Hongsilp and Suen, Richard M. H. (2019): Sources of Economic Growth in Models with Non-Renewable Resources.

Abstract

This paper re-examines the possibility of endogenous long-term economic growth in neoclassical models with non-renewable resources. Instead of using a Cobb-Douglas production function as in most existing studies, we consider a general class of production functions in which physical capital is functionally separable from labour and natural resources. It is shown that if the elasticity of substitution between labour and resources is identical to one, then long-term economic growth is endogenous. But if this elasticity is bounded above or below by one, as suggested by empirical evidence, then long-term economic growth is determined a priori by an exogenous technological factor.

• Item Type: MPRA Paper
• Language: English
• Keywords: Non-Renewable Resources; Endogenous Growth; 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

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