Balanced economic growth with depleting resources in a multi-sectoral economy

Journal Article · Tue Sep 01 04:00:00 EDT 1981 · Int. J. Policy Anal. Inf. Syst.; (United States)

OSTI ID:6545805

Gehrels, G

This essay treats depleting resources in a general equilibrium context. We wish to see what income, allocative, and price effects come out of the increasing scarcity of extractive goods. For this purpose we construct a three-sector economy consisting of a consumption-goods, investment-goods, and an extractive sector. It is a closed economy, and could be taken as the world economy. The supply of labor is held constant, and the state of the arts is unchanging. The stock of capital grows through saving, while the primary good becomes more difficult to extract with cumulative depletion. The first section below uses a dynamic-programming formulation to show that with costs rising as a consequence of past extraction the price of the primary good must rise over time, whether or not there is complete exhaustion. Or, at a constant price its output must decline. The second section uses this information, together with the accumulation of capital, to solve the allocation problem. It is shown that capital accumulation and resource depletion pull in different directions, and that supply effects dominate final-demand effects. The amount of consumption can either rise or fall over time, depending on the rate of saving on the one hand, and cumulative depletion on the other.

• Research Organization: Inst. f. Versicherungswirtschaft, Univ. Munchen, Ludwigstr. 33, 8000 Munchen 22
• OSTI ID: 6545805
• Journal Information: Int. J. Policy Anal. Inf. Syst.; (United States), Journal Name: Int. J. Policy Anal. Inf. Syst.; (United States) Vol. 5:3; ISSN IPASD
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290400* -- Energy Planning & Policy-- Energy Resources
ALLOCATIONS
DEMAND
DYNAMIC PROGRAMMING
ECONOMIC IMPACT
ENERGY CONSUMPTION
ENERGY DEMAND
FUEL CONSUMPTION
PROGRAMMING
RESOURCE DEPLETION
SUPPLY AND DEMAND