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Sustainable Economic Growth in an Economy with Exhaustible Resources and a Declining Population under the Balance-of-Payments Constraint

Hiroaki Sasaki (), Noriki Fukatani, Daisuke Imai and Yusuke Kamanaka

MPRA Paper from University Library of Munich, Germany

Abstract: This study builds a growth model and theoretically investigated the effects of the depletion of resources, as well as an increase or decrease in population, on the growth rate of per capita consumption in an open economy that trades with the rest of the world. We specifically consider an open economy where final goods are produced with capital, labor, exhaustible resources, and imported intermediate goods. We examine two cases. In one case, the input ratio of exhaustible resources is fixed while in the other case, it is endogenously determined. In both cases, as long as the combinations of the parameters are confined within a specific range, the long-term growth rate of per capita consumption is positive, irrespective of whether the population growth rate is positive or negative. Comparing the case where the input ratio of exhaustible resources is fixed with the case where it is endogenized, in the latter case, the long-term growth rate of per capita consumption is more likely to be positive.

Keywords: exhaustible resources; population decline; international trade; balance-of-payments constraint; sustainable growth (search for similar items in EconPapers)
JEL-codes: J11 O13 O41 Q32 (search for similar items in EconPapers)
Date: 2022-06-25
New Economics Papers: this item is included in nep-env and nep-gro
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