Transitional dynamics in an R&D-based growth model with natural resources |
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| Institution: | 1. University of Queensland, Australia;2. Flinders University, Australia;3. IPAG Business School, France;4. Paris School of Economics, France;5. French National Center for Scientific Research, France;6. Viet Nam Center of Research in Economics, Management and Environment, Viet Nam;1. Departamento de Estatística e Investigación Operativa, Universidade de Santiago de Compostela, Spain;2. Departamento de Matemáticas, Universidade de Vigo, Spain;3. Departamento de Estatística e Investigación Operativa, Universidade de Vigo, Spain;1. EEFA Research Institute, Muenster, Germany;2. Department of Economics, Goethe University Frankfurt, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt am Main, Germany;1. World Bank, Washington DC, USA;2. Inter-American Development Bank, Washington DC, USA;1. EPEE, University of Evry Val d’Essonne, France;2. LEM, University of Lille 3, France;1. Institute of Operations Research, Hangzhou Dianzi University, Hangzhou, Zhejiang, 310018, China;2. School of Economics, Shanghai University of Finance and Economics, Shanghai, 200433, China;3. Department of Economics, Texas A&M University, College Station, TX 77843, USA |
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| Abstract: | In this paper, we prove the existence and uniqueness of the optimal path for a resource endowed economy with R&D. This path converges to an optimal steady state, which is a saddle point, for each type of resources (renewable or non-renewable). In this steady state, a finite size resource sector coexists with other continuously growing sectors. In comparison, the corresponding decentralized equilibrium is suboptimal and there is either over- or under-investment in R&D from the social planner’s perspective. At optimum, positive long-run growth will be sustained regardless type of resources used. |
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