R&D policy in Economies with Endogenous Growth and Non Renewable Resources

Betty Agnani (), Mª José Gutiérrez and Amaia Iza
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Mª José Gutiérrez: Universidad del País Vasco
Amaia Iza: Universidad del País Vasco

No E2008/11, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: The aim of this paper is to analyze how active R&D policies affect the growth rate of an economy with endogenous growth and non-renewable resources. We know from Scholz and Ziemens (1999) and Groth (2006) that in infinitely lived agents (ILA) economies, any active R&D policy increases the growth rate of the economy. To see if this result also appears in economies with finite lifetime agents, we developed an endogenous growth overlapping generations (OLG) economy à la Diamond which uses non-renewable resources as essential inputs in final good’s production. We show analytically that any R&D policy that reduces the use of natural resources implies a raise in the growth rate of the economy. Numerically we show that in economies with low intertemporal elasticity of substitution (IES), active R&D policies lead the economy to increase the depletion of non-renewable resources. Nevertheless, we find that active R&D policies always imply increases in the endogenous growth rate, in both scenarios. Furthermore, when the IES coefficient is lower (greater) than one, active R&D policies affect the growth rate of the economy in the ILA more (less) than in OLG economies.

Keywords: Crecimiento endógeno; I+D; recursos no renovables; sendas de crecimiento; estable; endogenous growth; R&D; non-renewable resources; overlapping generations; infinitely lived agents; balanced growth path. (search for similar items in EconPapers)
JEL-codes: O13 O40 Q32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-env, nep-ino and nep-mic
Date: 2008

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Related works:
Working Paper: R&D Policy in Economies with Endogenous Growth and Non-Renewable Resources (2007)
Working Paper: R&D Policy in Economies with Endogenous Growth and Non-Renewable Resources (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cea:doctra:e2008_11

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