IDEAS home Printed from https://ideas.repec.org/p/cir/cirwor/96s-09.html
   My bibliography  Save this paper

Constant Consumption and the Economic Depreciation of Natural Capital : The Non Autonomous Case

Author

Listed:
  • John M. Hartwick
  • Ngo Van Long

Abstract

We investigate economic depreciation of natural capital for cases of non-stationary output prices, technology and interest rates. For the former two cases (exogenous movements in prices and technology), constant consumption emerges under a strategy of investing to cover off economic depreciation. The interest rate case requires a modified sinking fund strategy. Nous décrivons une formule pour comptabiliser la dépréciation économique des stocks de capital (y compris la qualité de l'environnement) dans les cas où les prix, la technologie et les taux d'intérêt ne sont pas stationnaires. Dans les deux premiers cas, le taux de consommation est constant si l'on adopte une stratégie d'investissement pour compenser la dépréciation économique. Dans le cas où le taux d'intérêt n'est pas stationnaire, on a besoin d'une stratégie modifiée pour s'assurer un taux de consommation constant.

Suggested Citation

  • John M. Hartwick & Ngo Van Long, 1996. "Constant Consumption and the Economic Depreciation of Natural Capital : The Non Autonomous Case," CIRANO Working Papers 96s-09, CIRANO.
    • Handle: RePEc:cir:cirwor:96s-09
    as

    Download full text from publisher

    File URL: https://cirano.qc.ca/files/publications/96s-09.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 551-556.
    2. repec:bla:scandj:v:88:y:1986:i:1:p:153-55 is not listed on IDEAS
    3. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586.
    4. Kemp,M.C. & Van Long, N., 1995. "On the Evaluation of Social Income in a Dynamic Economy: Generalizations," Papers 95/43, New South Wales - School of Economics.
    5. Michel, Philippe, 1982. "On the Transversality Condition in Infinite Horizon Optimal Problems," Econometrica, Econometric Society, vol. 50(4), pages 975-985, July.
    6. Vincent, Jeffrey R. & Panayotou, Theodore & Hartwick, John M., 1997. "Resource Depletion and Sustainability in Small Open Economies," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 274-286, July.
    7. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    8. Lozada, Gabriel A., 1995. "Resource depletion, national income accounting, and the value of optimal dynamic programs," Resource and Energy Economics, Elsevier, vol. 17(2), pages 137-154, August.
    9. Geir Asheim, 1994. "The Weitzman Foundation of NNP with Non-constant Interest Rates," CESifo Working Paper Series 75, CESifo.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hans-Werner Sinn, 1999. "Inflation and Welfare: Comment on Robert Lucas," NBER Working Papers 6979, National Bureau of Economic Research, Inc.
    2. Butterfield, David W., 2003. "Resource depletion under uncertainty: implications for mine depreciation, Hartwick's Rule and national accounting," Resource and Energy Economics, Elsevier, vol. 25(3), pages 219-238, August.
    3. Mino, Kazuo, 2004. "On the Generalized Weitzman's Rule," MPRA Paper 16996, University Library of Munich, Germany.
    4. Mino, Kazuo, 2004. "Weitzman's rule with market distortions," Japan and the World Economy, Elsevier, vol. 16(3), pages 307-329, August.
    5. Hartwick, John M. & Van Long, Ngo & Tian, Huilan, 2001. "Deforestation and Development in a Small Open Economy," Journal of Environmental Economics and Management, Elsevier, vol. 41(3), pages 235-251, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Butterfield, David W., 2003. "Resource depletion under uncertainty: implications for mine depreciation, Hartwick's Rule and national accounting," Resource and Energy Economics, Elsevier, vol. 25(3), pages 219-238, August.
    2. Cairns, Robert D. & Del Campo, Stellio & Martinet, Vincent, 2019. "Sustainability of an economy relying on two reproducible assets," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 145-160.
    3. van der Ploeg, Frederick, 2010. "Why do many resource-rich countries have negative genuine saving?: Anticipation of better times or rapacious rent seeking," Resource and Energy Economics, Elsevier, vol. 32(1), pages 28-44, January.
    4. Yu, Yun & Lei, Yalin, 2017. "China's provincial exhaustible resources rent and produced capital stock—Based on Hartwick's rule," Resources Policy, Elsevier, vol. 52(C), pages 114-121.
    5. Geir B. Asheim, 2003. "Green national accounting for welfare and sustainability:A Taxonomy Of Assumptions And Results," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 113-130, May.
    6. d'Autume, Antoine & Schubert, Katheline, 2008. "Hartwick's rule and maximin paths when the exhaustible resource has an amenity value," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 260-274, November.
    7. Nick Hanley & Louis Dupuy & Eoin McLaughlin, 2015. "Genuine Savings And Sustainability," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 779-806, September.
    8. d'Autume, Antoine & Hartwick, John M. & Schubert, Katheline, 2010. "The zero discounting and maximin optimal paths in a simple model of global warming," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 193-207, March.
    9. Geir B. Asheim & Rintaro Yamaguchi, 2023. "Comprehensive National Accounting for Carbon Emissions," CESifo Working Paper Series 10562, CESifo.
    10. Frederick Ploeg, 2011. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights: A Puzzle," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 105-128, January.
    11. Kirk Hamilton & Giovanni Ruta & Liaila Tajibaeva, 2006. "Capital Accumulation and Resource Depletion: A Hartwick Rule Counterfactual," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(4), pages 517-533, August.
    12. Kirk Hamilton & Giles Atkinson, 2013. "Resource Discoveries, Learning and National Income Accounting," GRI Working Papers 117, Grantham Research Institute on Climate Change and the Environment.
    13. Rintaro Yamaguchi & Masayuki Sato & Kazuhiro Ueta, 2016. "Measuring Regional Wealth and Assessing Sustainable Development: An Application to a Disaster-Torn Region in Japan," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(1), pages 365-389, October.
    14. Asheim, Geir B., 2000. "Green national accounting: why and how?," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 25-48, February.
    15. Martinet, Vincent, 2007. "A step beside the maximin path: Can we sustain the economy by following Hartwick's investment rule?," Ecological Economics, Elsevier, vol. 64(1), pages 103-108, October.
    16. Michel Moreaux, 2008. "Introduction," Revue d'économie politique, Dalloz, vol. 118(6), pages 783-785.
    17. Bazhanov, Andrei V., 2015. "Inefficiency and sustainability," Resources Policy, Elsevier, vol. 45(C), pages 210-216.
    18. Frederick van der Ploeg, 2007. "Genuine Saving and the Voracity Effect," Economics Working Papers ECO2007/38, European University Institute.
    19. Rintaro Yamaguchi, 2021. "Genuine Savings and Sustainability with Resource Diffusion," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(2), pages 451-471, October.
    20. Michel Moreaux & Jean-Pierre Amigues, 2008. "Efficient and Optimal Capital Accumulation under a Non Renewable Resource Constraint," Revue d'économie politique, Dalloz, vol. 118(6), pages 791-825.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cir:cirwor:96s-09. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Webmaster (email available below). General contact details of provider: https://edirc.repec.org/data/ciranca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.