Short-Run Macroeconomics with Exhaustible Resources

Jon Harkness

Working Paper from Economics Department, Queen's University

Abstract: This paper constructs a simple, two-sector stochastic equilibrium macro-model of a closed economy. There is an extractive sector which produces raw materials as an intermediate input into a manufacturing sector. Natural resources are exhaustible. In the short-run, with the capital stock fixed, extraction appreciably lowers the natural resource stock. The model does not have a stationary solution because every variable's value is tied to the diminishing size of resource stocks.

Pages: 28
Date: 1983
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:527

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