Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171470
Authors: 
Bretschger, Lucas
Smulders, Sjak
Year of Publication: 
2006
Series/Report no.: 
Economics Working Paper Series 03/26
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&Dbased endogenous growth model with exhaustible natural resources, labour, and knowledge 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 so that growth is sustained. We demonstrate that long-run growth can be sustained under free market conditions even when elasticities of substitution between man-made inputs and resources are low.
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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