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Economic Growth and Property Rights on Natural Resources

Kirill Borissov () and Mikhail Pakhnin ()

No CE3S-05/14, CEEES Paper Series from European University at St. Petersburg, Department of Economics

Abstract: We consider two models of economic growth with exhaustible natural resources, exogenous technical progress and agents heterogeneous in their time preferences. In the first model we assume private ownership of natural resources. We show that every competitive equilibrium in this model converges to a balanced-growth equilibrium. The long-run extraction rate and the rate of growth are determined by the discount factor of the most patient agents. The second model assumes public ownership of natural resources. The resource revenue is equally distributed among agents, who choose the resource extraction rate by voting. We define an intertemporal voting equilibrium and show that it also converges to a balanced-growth equilibrium. The long-run voting equilibrium extraction rate and the rate of growth are determined by the median discount factor. Our results suggest that, other things being equal, the growth rate in the case of private ownership is higher than that of public ownership if the most patient agents do not constitute the majority in population; otherwise there is no difference in the growth rates between the two regimes. However, in the long run private ownership leads to a higher level of inequality than public ownership. If we take into account the detrimental effect of inequality on economic growth, then the public property regime will likely result in a higher long-run rate of growth compared to the private property regime.

Keywords: economic growth; exhaustible resources; heterogeneous agents; voting (search for similar items in EconPapers)
JEL-codes: D91 E13 O40 Q32 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2014-12-31
New Economics Papers: this item is included in nep-cdm, nep-fdg and nep-gro
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Related works:
Journal Article: Economic growth and property rights on natural resources (2018) Downloads
Working Paper: Economic Growth and Property Rights on Natural Resources (2016) Downloads
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