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Nonrenewable Energy Resources As Input For Physical Capital Accumulation: A New Approach

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  • Pérez-Barahona, Agustín

Abstract

In contrast to the standard approach in energy economics, this paper assumes that physical capital accumulation is relatively more energy-intensive than consumption. By means of Gaussian hypergeometric functions, we provide a closed-form representation of the optimal solution paths of our variables in levels, whatever the initial conditions (i.e., global dynamics). We find that, in general, the optimal trajectories are nonmonotonic. P.S. Dasgupta and G.M. Heal [Review of Economic Studies (special number), 3–28 (1974)] pointed out this result (local dynamics) for the optimal consumption in a model with identical technology for both physical capital accumulation and consumption. However, our paper introduces five novelties with respect to their study, namely, global dynamics, the importance of the proportion of nonrenewable energy resources to endowment of physical capital [S(0)/K(0)], the role of technical progress, U-shaped behavior of consumption, and nonmonotonicity of resource extraction.

Suggested Citation

  • Pérez-Barahona, Agustín, 2011. "Nonrenewable Energy Resources As Input For Physical Capital Accumulation: A New Approach," Macroeconomic Dynamics, Cambridge University Press, vol. 15(1), pages 1-30, February.
    • Handle: RePEc:cup:macdyn:v:15:y:2011:i:01:p:1-30_09
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    Cited by:

    1. Antony, Jürgen & Klarl, Torben, 2019. "Resource depletion in a Ramsey economy with subsistence consumption, exogenous technical change and capital depreciation: A full characterization," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203640, Verein für Socialpolitik / German Economic Association.
    2. Antony, Jürgen & Klarl, Torben, 2023. "Subsistence consumption and natural resource depletion: Can resource-rich low-income countries realize sustainable consumption paths?," Journal of Macroeconomics, Elsevier, vol. 77(C).
    3. Creina Allen & Garth Day, 2014. "Does China's demand boom curb Australian iron ore mining depletion?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 244-262, April.
    4. Jürgen Antony & Torben Klarl, 2019. "Non-Renewable Resources in a Ramsey Economy with Subsistence Consumption, Human and Physical Capital Accumulation: A full Characterization," Bremen Papers on Economics & Innovation 1904, University of Bremen, Faculty of Business Studies and Economics.
    5. Antony, Jürgen & Klarl, Torben, 2022. "Poverty and sustainable development around the world during transition periods," Energy Economics, Elsevier, vol. 110(C).

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