Maximin-optimal sustainable growth with nonrenewable resource and externalities

Andrei Bazhanov

MPRA Paper from University Library of Munich, Germany

Abstract: I offer an approach linking a welfare criterion to the "sustainable development potential" of the economy. This implies a dependence of a criterion on the information about the current state. I consider the problem for the Dasgupta-Heal-Solow-Stiglitz model with externalities. The economy-linked criterion is constructed on an example of the maximin principle applied to a hybrid level-growth measure. This measure includes as special cases the conventional measures of consumption level and percent change as a measure of growth. The hybrid measure or geometrically weighted percent can be used for measuring sustainable growth as an alternative to percent. The closed form solutions are obtained for the optimal paths including the paths, dynamically consistent with the information updates.

Keywords: essential nonrenewable resource, modified Hotelling Rule, economy-linked criterion; geometrically weighted percent; normative resource peak (search for similar items in EconPapers)
JEL-codes: D63 H23 O13 O47 Q32 Q38 (search for similar items in EconPapers)
Date: 2008-01-02, Revised 2008-07-02
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (2)

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Working Paper: Maximin-optimal sustainable growth with nonrenewable resource and externalities (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9510

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