2002 World Congress of Environmental and Resource Economists

The neoclassical growth model and its extensions in such fields as resource economics or endogenous growth theory typically assume that population is constant or grows at a given rate. With this assumption, economies exhibit one saddle-point stable stationary state, and economies with the same parameter configuration will converge to the same steady state, or to the same balanced growth path with technological progress, regardless of initial conditions. This paper solves for the properties of a growth model that incorporates a general population growth function within the framework of a natural resource-dependent economy. The functional form for population growth is allowed to exhibit the different properties found in the demography literature. In contrast to the standard case, this model exhibits nonlinear dynamics, with single or multiple steady states of different stability types, implying that similar resource-dependent economies beginning their development from different initial conditions may end up in different steady states or, under technological progress, different balanced growth paths. Taking a broader view, the results imply that free markets may not be able to close the gap between rich and poor countries, and that sustainable development literature needs to assess the implications of multiple sustainable growth paths in a single economy.



	Paper Title:	Endogenous Population Growth, Renewable Resources, And Nonlinear Dynamics
	Presenting Author:	Rafael Reuveny (Indiana University)
	Coauthor 1:	Kerry Krutilla
	Coauthor 2:
	Coauthor 3:
	Abstract:	The neoclassical growth model and its extensions in such fields as resource economics or endogenous growth theory typically assume that population is constant or grows at a given rate. With this assumption, economies exhibit one saddle-point stable stationary state, and economies with the same parameter configuration will converge to the same steady state, or to the same balanced growth path with technological progress, regardless of initial conditions. This paper solves for the properties of a growth model that incorporates a general population growth function within the framework of a natural resource-dependent economy. The functional form for population growth is allowed to exhibit the different properties found in the demography literature. In contrast to the standard case, this model exhibits nonlinear dynamics, with single or multiple steady states of different stability types, implying that similar resource-dependent economies beginning their development from different initial conditions may end up in different steady states or, under technological progress, different balanced growth paths. Taking a broader view, the results imply that free markets may not be able to close the gap between rich and poor countries, and that sustainable development literature needs to assess the implications of multiple sustainable growth paths in a single economy.
	Link to paper:	Not available

	Session / Day / Time	2D / Monday / 10:15 - 11:45 am

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