Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value

Antoine d'Autume () and Katheline Schubert
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Antoine d'Autume: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This paper studies the undiscounted utilitarian optimal paths of the canonical Dasgupta-Heal-Solow model when the stock of natural capital is a direct argument of well-being, besides consumption. We use a Keynes-Ramsey rule wich yields a generalization of Hartwick's rule: if society has a zero discount rate but is ready to accept intertemporal substitution, net investment should not be zero as in the maximin case but should be positive, its level depending on the distance between the current and the long run bliss level of utility. We characterize solutions in the Cobb-Douglas utility and production case, and analyse the influence of the intertemporal elasticity of substitution on the time profile of the optimal paths. We show that, in the Cobb-Douglas case, the ratio of the values of the resource and capital stocks remains constant along the optimal path, and is independent of initial conditions.

Keywords: Ressources épuisables; règle de Hartwick; substitution intertemporelle; Exhaustible resources; Hartwick's rule; intertemporal substitution (search for similar items in EconPapers)
Date: 2009-02
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00367910v1
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Published in 2009

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Related works:
Working Paper: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2009)
Working Paper: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2009)
Journal Article: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2008)
Working Paper: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2008)
Working Paper: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2008)
Working Paper: Zero discounting and optimal paths of depletion of an exhaustible resource with an amenity value (2008)
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