Subsistence Consumption and Natural Resource Depletion: Can resource-rich low-income countries realize sustainable consumption paths?

Jürgen Antony and Torben Klarl

No 2302, Bremen Papers on Economics & Innovation from University of Bremen, Faculty of Business Studies and Economics

Abstract: This contribution is concerned with efficient use of a resource if households are characterized by Stone-Geary preferences with a minimum subsistence level of consumption. Subsistence consumption implies particular minimum requirements for initial endowments with reproducible man-made capital and resources. If these are not met, the economy is not able to cover subsistence consumption such as nutrition. Focusing on the steady state, we find that the equilibrium can be governed by zero or positive growth. The latter occurs if the rate of exogenous technical change exceeds the rate of time preference. In the former case, we can show that Hartwick’s investment rule applies in a steady state. Finally, we calibrate the model for developing but resource-rich countries and trace the full dynamic development of the economy. Furthermore, we evaluate this full adjustment process regarding several sustainability indicators.

Keywords: Automation; Minimum subsistence level of consumption; Resource depletion; Resource-rich low-income countries (search for similar items in EconPapers)
JEL-codes: E21 O44 Q30 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2023-07
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Subsistence consumption and natural resource depletion: Can resource-rich low-income countries realize sustainable consumption paths? (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:atv:wpaper:2302

DOI: 10.26092/elib/2362

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