Abstract
The preceding chapters considered labor and capital as the only factors for production. Labor is a resource that is available in every period and that even increases as the population grows. Physical capital decreases through depreciation, but can be increased endogenously by investing accordingly. However, production often requires also resources that are exhaustible like for example oil, plutonium or land. Some exhaustible resources might not be needed for production in the future due to new ways of producing, but some might remain essential for production.
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Notes
- 1.
Population growth is typically small and a typical β is between 0.05 and 0.2.
References
Hotelling, H. (1931) The economics of exhaustible resources. Journal of Political Economics, 39 (2), 137–175.
Stiglitz, J. (1974). Growth with exhaustible natural resources: Efficient and optimal growth paths. The Review of Economic Studies, 41, 123–137.
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Hens, T., Elmiger, S. (2019). Extension of the Model to Exhaustible Resources. In: Economic Foundations for Finance. Springer Texts in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-030-05427-4_7
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DOI: https://doi.org/10.1007/978-3-030-05427-4_7
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