Policy implications in an environmental growth model with a generalized Hotelling depletion of non-renewable resources

Giovanni Bella and Paolo Mattana

Journal of Environmental Economics and Policy, 2019, vol. 8, issue 2, 179-192

Abstract: We explore the role of fiscal policy in a growth model where the depletion of non-renewable resources presents stock effects. We first show that fiscal policy may induce the emergence of two coexisting steady states, one of which is characterized by a lower depletion rate and higher income (the virtuous steady state) than the other (the bad steady state). If returns to the cumulable inputs are high enough, the virtuous steady state is locally saddle-path stable, whereas the bad steady state is a non-saddle rest point. Therefore, depending on the size of returns, a continuum of equilibrium paths can emerge. Thus, it is important to calibrate the correct mix of policy instruments that may drive the economy to the virtuous steady state, and therefore escape a possible (low growth) poverty trap.

Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/21606544.2018.1530612 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:teepxx:v:8:y:2019:i:2:p:179-192

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/teep20

DOI: 10.1080/21606544.2018.1530612

Access Statistics for this article

Journal of Environmental Economics and Policy is currently edited by Ken Willis

More articles in Journal of Environmental Economics and Policy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().