Sustainable development, the Hartwick rule and optimal growth

Kirk Hamilton

Environmental & Resource Economics, 1995, vol. 5, issue 4, 393-411

Abstract: Defining sustainable development as non-declining utility, the consistency of this concept with the Hartwick rule and optimal growth is explored when resources are exhaustible. A simple proof that a generalized Hartwick rule is necessary and sufficient for constant consumption is derived. The existence of a maximal constant consumption path is shown to depend critically on the elasticity of substitution; if this is less than 1, consumption declines; if it is greater than 1 then consumption is not maximal; if it is equal to 1 (the Cobb-Douglas case) then existence is proved. Consumption can increase along an optimal path if the pure rate of time preference is 0; if it is non-zero then consumption declines. Copyright Kluwer Academic Publishers 1995

Keywords: Hartwick rule; optimal growth; exhaustible resources (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (29)

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DOI: 10.1007/BF00691576

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