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Exhaustible resource use under endogenous time preference

Author

Listed:
  • Akira Maeda

    (The University of Tokyo)

  • Makiko Nagaya

    (Showa Women’s University)

Abstract

This paper revisits a classical economic topic of exhaustible resource use on the basis of recent developments in time preference and discount factor models. An analysis of the effects of endogenous time preferences on the dynamic properties of resource use is conducted, contrasting the classical Hotelling results. More specifically, we develop an analytical model that incorporates endogenous time preference into the decision framework of resource consumption. It is expected that the results obtained here not only contribute to the literature of pure economic theory, but also to recent climate policy debates on discounting factors.

Suggested Citation

  • Akira Maeda & Makiko Nagaya, 2023. "Exhaustible resource use under endogenous time preference," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 223-248, February.
    • Handle: RePEc:spr:ijoeps:v:17:y:2023:i:1:d:10.1007_s42495-022-00101-9
    DOI: 10.1007/s42495-022-00101-9
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    References listed on IDEAS

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    3. Obstfeld, Maurice, 1990. "Intertemporal dependence, impatience, and dynamics," Journal of Monetary Economics, Elsevier, vol. 26(1), pages 45-75, August.
    4. Epstein, Larry G & Hynes, J Allan, 1983. "The Rate of Time Preference and Dynamic Economic Analysis," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 611-635, August.
    5. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    6. Das, Mausumi, 2003. "Optimal growth with decreasing marginal impatience," Journal of Economic Dynamics and Control, Elsevier, vol. 27(10), pages 1881-1898, August.
    7. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
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    More about this item

    Keywords

    Habit formation; Hotelling’s rule; Discounting; Social time preference; Backstop technology;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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