Controlling an infectious disease and sustainability: lessons from Hartwick’s Rule

Maîtriser une épidémie et durabilité: leçons à partir de la règle d'Hartwick

Can Askan Mavi () and Benteng Zou
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Can Askan Mavi: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This paper tries to understand how a pandemic disease changes the relationship between different production factors such as labor, capital and natural resource extraction under maximin criterion, that consists of providing a constant utility to each generation over time. We show that the prevention policy plays an important role to implement an optimal and sustainable economy. We also show that a public policy such as lockdown or social distancing may decrease or increase the natural resource extraction, depending on the cost of the public policy. Understanding these opposite cases is crucial to know how to create a sovereign wealth fund (i.e, capital accumulation) that is composed by natural resource rents. Another important result is that in an economy facing a pandemic, an increase in natural resource extraction does not mean a direct increase in capital accumulation as documented in the existing literature. In this sense, we also challenge the well-known Hartwick rule's "all resource rents invested in capital accumulation" idea.

Keywords: Maximin principle; Intergenerational equity; Pandemic; Hartwick's rule (search for similar items in EconPapers)
Date: 2022
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03607230v2
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Working Paper: Controlling an infectious disease and sustainability: lessons from Hartwick’s Rule (2022)
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