Sustainable Economic Growth in an Economy with Exhaustible Resources and a Declining Population under the Balance-of-Payments Constraint

Sasaki, Hiroaki and Fukatani, Noriki and Imai, Daisuke and Kamanaka, Yusuke (2022): Sustainable Economic Growth in an Economy with Exhaustible Resources and a Declining Population under the Balance-of-Payments Constraint.

Abstract

This study builds a growth model and theoretically investigated the effects of the depletion of resources, as well as an increase or decrease in population, on the growth rate of per capita consumption in an open economy that trades with the rest of the world. We specifically consider an open economy where final goods are produced with capital, labor, exhaustible resources, and imported intermediate goods. We examine two cases. In one case, the input ratio of exhaustible resources is fixed while in the other case, it is endogenously determined. In both cases, as long as the combinations of the parameters are confined within a specific range, the long-term growth rate of per capita consumption is positive, irrespective of whether the population growth rate is positive or negative. Comparing the case where the input ratio of exhaustible resources is fixed with the case where it is endogenized, in the latter case, the long-term growth rate of per capita consumption is more likely to be positive.

• Item Type: MPRA Paper
• Language: English
• Keywords: exhaustible resources; population decline; international trade; balance-of-payments constraint; sustainable growth
• Subjects: J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends, Macroeconomic Effects, and Forecasts; 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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