Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/118108
Authors: 
Bretschger, Lucas
Smulders, Sjak
Year of Publication: 
2003
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 87.2003
Abstract: 
Traditional resource economics has been criticised for assuming too high elasticities of substitution, not observing material balance principles and relying too much on planner solutions to obtain long-term growth. By analysing a multi-sector R&D-based endogenous growth model with exhaustible natural resources, labour, knowledge, and physical capital as inputs, the present paper addresses this critique. We study transitional dynamics and the long-term growth path and identify conditions under which firms keep spending on research and development. We demonstrate that long-run growth can be sustained under free market conditions even when elasticities of substitution between capital and resources are low and the supply of physical capital is limited, which seems to be crucial for today's sustainability debate.
Subjects: 
Growth
Non-renewable resources
Substitution
Investment incentives
Endogenous technological change
Sustainability
JEL: 
Q20
Q30
O41
O33
Document Type: 
Working Paper

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