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NONRENEWABLE ENERGY RESOURCES AS INPUT FOR PHYSICAL CAPITAL ACCUMULATION: A NEW APPROACH

Published online by Cambridge University Press:  22 February 2010

Agustín Pérez-Barahona
Agustín Pérez-Barahona*
Affiliation:
INRA-AgroParisTech and École Polytechnique
*
Address correspondence to: Agustín Pérez-Barahona, INRA-Économie publique, Avenue Lucien Brétignières, 78850 Thiverval Grignon, France; e-mail: agperez@grignon.inra.fr.
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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.

Keywords

Nonrenewable ResourcesEnergy-Saving Technical ProgressSpecial FunctionsGlobal Dynamics
Type
Articles
Information
Macroeconomic Dynamics , Volume 15 , Issue 1 , February 2011 , pp. 1 - 30
Copyright
Copyright © Cambridge University Press 2010

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