optimal management of renewable resources with growing demand and stock externalities abstract in an equilibrium framework optimal management of renewable resources in the presence of growing demand or externalities leads to steady states that differ from those characterized by rate of interest equals rate of change in growth plus rate of change in prices measures to reach an optimum with externalities other than direct controls are found to be critically mediated by the costs of harvesting

renewable natural resource management and use without markets natural resources by their nature are not readily bent to the status of private property efficient resource use is complicated by jurisdictional externalities public goods non use values and beneficiaries spatially separated from the location of resources the task is made more challenging by ecological complexity that obscures cause benefits and effects costs and dramatic time lags between individual actions and subsequent social consequences that together with substantial uncertainty introduce the chance of irreversibilities resource economists have played a major role in the literature on externalities the development of individual transferable quotas non market valuation techniques and common property management

history dependence in concave economies abstract this paper investigates concave intertemporal optimization problems and derives two mechanisms either growth or control state interactions e g due to endogenous preferences that allow for multiple steady states including an unstable one therefore history dependence is possible in a perfectly governed economy subject to the law of diminishing returns if one of these two mechanisms is present this result complements a large amount of literature that attributes history dependence to convexities as a consequence lock ins into undesired evolutions are possible beyond the familiar case of increasing returns

natural resources curse or blessing are natural resources a curse or a blessing the empirical evidence suggests that either outcome is possible this paper surveys a variety of hypotheses and supporting evidence for why some countries benefit and others lose from the presence of natural resources these include that a resource bonanza induces appreciation of the real exchange rate deindustrialization and bad growth prospects and that these adverse effects are more severe in volatile countries with bad institutions and lack of rule of law corruption presidential democracies and underdeveloped financial systems another hypothesis is that a resource boom reinforces rent grabbing and civil conflict especially if institutions are bad induces corruption especially in nondemocratic countries and keeps in place bad policies finally resource rich developing economies seem unable to successfully convert their depleting exhaustible resources into other productive assets the survey also offers some welfare based fiscal rules for harnessing resource windfalls in developed and developing economies

evolution of population resource dynamics models abstract this paper provides a comprehensive analysis of brander and taylor s 1998 model and its descendants from the following perspectives population growth substitutability innovation capital accumulation property rights and institutional designs and modeling approach this survey aims to contribute to a better understanding of population and resource dynamics models in general and facilitate further application of the model framework to relevant circumstances although often treated as exogenous in optimal growth models making population growth an endogenous function allows us to analyze broader effects of economic activities on population the issues of substitutability innovation and capital accumulation are intertwined allowing a model to address the effect of an endogenous technological change on substitutability between natural and man made capital facilitates our analyses of sustainability issues to address internalizing inter generational externalities in resource use incorporating property right changes and institutional designs to this type of model is a useful exercise but careful attention is needed for the consistency between such an arrangement and the mathematical representation of the depicted economy finally although the common criticism regarding convenient mathematical assumptions applies to the existing bt type models the use of computer simulation can relax such assumptions to better represent the intended relationships between the relevant variables

with exhaustible resources can a developing country escape from the poverty trap this paper studies the optimal growth of a developing non renewable natural resource producer which extracts the resource from its soil and produces a single consumption good with man made capital moreover it can sell the extracted resource abroad and use the revenues to buy an imported good which is a perfect substitute of the domestic consumption good the domestic technology is convex concave so that the economy may be locked into a poverty trap we study the optimal extraction and depletion of the exhaustible resource and the optimal paths of accumulation of capital and of domestic consumption we show that the extent to which the country will optimally escape from the poverty trap and the exhaustible resource will be a blessing depends on the characteristics of its technology and of the revenues from the resource function on its impatience on the level of its initial stock of capital and on the abundance of the natural resource if the marginal productivity of capital at the origin is greater than the sum of the social discount rate and the depreciation rate the country will accumulate capital along the entire growth path and will escape from the poverty trap whatever its initial stocks of capital and resource and provided that the marginal revenue obtained from the exportation of the resource is finite at the origin on the contrary if the marginal productivity of capital is lower than the depreciation rate whatever the level of capital and if moreover the initial stock of capital is small then the country will never accumulate it will consume the revenues obtained from selling abroad the extracted resource until there is no resource left and the economy collapses we also show that any optimal path may be decentralized in a competitive equilibrium by using a tax subsidy scheme for firms

explaining fashion cycles imitators chasing innovators in product space abstract this paper considers the problem of a fashion trend setter confronting an imitator who can produce the same product at lower cost a one dimensional product space is considered which is an abstraction of the key attribute of some consumer good three broad strategies can be optimal for the fashion leader 1 never innovate which milk profits from the initially advantageous position but ultimately concede the market without a fight 2 innovate once but only once which just temporarily defers conceding the market 3 cycle infinitely around product space never letting the imitator catch up and capture the market sometimes the cycles start immediately sometimes the innovator should wait for a time before beginning the cycles the optimal solution exhibits strong state dependency with so called skiba curves separating regions in state space where various of these strategies are optimal there are even instances of intersecting skiba curves in most cases analytical expressions can be stated that characterize these skiba curves

deforestation and the rule of law in a cross section of countries relationships between deforestation and population pressure income growth and insecure property rights are examined with data from 120 countries insecure property rights are hypothesized to arise from two sources government instability or inability to enforce ownership and an absence of government accountability the former source is captured by measures of general lawlessness such as guerrilla warfare revolution and frequent constitutional change the latter is proxied by variables indicating the type of government executive frequency of political purges and the existence of an elected legislature general support is indicated for the property rights hypothesis and for the effects of population growth

climate change industrial transformation and environmental growth traps this paper examines the potential interactions in the global economy between the impacts of climate change on productivity with existing technology and increasing returns in the development of less vulnerable and lower emission technology a simple specification is used in which the global economy can produce a single homogeneous consumption good with two different technologies the old technology has global diminishing returns to scale and depends on the use of fossil energy that gives rise to long lived damaging climate change the new technology has convex concave production due to set up cost and is not vulnerable to climate change through simulations we show that if output with the new technology does not grow fast enough to move through the phase of increasing returns then the economy could experience an environmental growth trap lingering at a low level of income indefinitely or achieving some progress but then getting driven back to a lower level of income by productivity reducing environmental degradation we discuss how the prospects of such a trap depend on the productivity and energy intensity of the old technology as well as the magnitude of the set up cost

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

relaxing the sure solvency conditions in temporary equilibrium models abstract the usual temporary equilibrium results hold when sure solvency conditions are appropriately relaxed preferences over potentially bankrupt states are represented by an extension of the indirect utility function for negative wealth for models without institutional constraints such as margin requirements sure solvency can be replaced by unbounded aversion to bankruptcy for models with institutional constraints sure solvency can be replaced by a weaker limit on maximum loss or expected loss

environmental externalities in traditional agriculture and the impact of trade liberalization the case of ghana abstract this paper provides a framework for the evaluation of trade policies that explicitly considers the effects of such policies on the environmental resources biomass in doing this we estimate the effects of biomass as a factor of agricultural production and test the hypothesis that farmers efficiently exploit biomass a resource held in common property the main findings are i biomass is an important factor of production in ghanian agriculture ii the biomass resource is exploited beyond the socially optimal level iii a deepening of trade liberalization is likely to induce further losses of biomass and deforestation and iv national income is likely to fall in response to further trade liberalization

indeterminacy in a dynamic small open economy abstract we show that even under socially constant returns to scale indeterminacy i e continuum of dynamic general equilibrium paths converging to a common steady state can arise in a dynamic small open economy with production externalities and endogenous time preferences in which production is incompletely specialized

the problem of global environmental protection what distinguishes global common property problems and global unidirectional externalities from the ones that arise under a single jurisdiction is that there is no global authority empowered to intervene and regulate use of global environmental resources cooperation is needed the paper discusses when cooperation is most needed and how it might be obtained cooperation might emerge from a noncooperative setting if supergames are played if the actions of any one country are explicitly contingent on the actions undertaken by other countries or if moral concerns lead countries to consider the consequences of their actions for others cooperation emerges in an explicit though limited form when countries commit to regulate themselves in signing international agreements in these cases the signatories cooperate but the agreements are self enforcing an attempt is made to relate these theoretical concepts to the practice of global environmental protection copyright 1990 by oxford university press

indeterminacy and sunspots with constant returns recently there has been a renewed interest in the possibility of indeterminacy and sunspots or alternatively put in the existence of a continuum of equilibria that arises in dynamic economies with some market imperfections much of the research in this area has been concerned with the empirical plausibility of indeterminacy in markets with external effects or with monopolistic competition and which exhibit some degree of increasing returns while the early results on indeterminacy relied on relatively large increasing returns and high markups more recently benhabib and farmer 1996a showed that indeterminacy can also occur in two sector models with small sector specific external effects and very mild increasing returns

a complete characterization of optimal growth paths in an aggregated model with a non concave production function the convexity of technology has played a crucial role in economic analyses of optimal one sector growth problems for example two of the key results on the traditional model of ramsey 1928 that have relied on the convexity of the technology are that optimal intertemporal growth involves moving monotonically towards a unique steady state as in cass 1965 koopmans 1965 and that the value function is a concave differentiable function of the initial capital stock as in benveniste and scheinkman 1979

the design of monetary and fiscal policy a global perspective abstract we study the emergence of multiple equilibria in models with capital and bonds under various monetary and fiscal policies we show that the presence of capital is indeed another independent source of local and global multiplicities even under active policies that yield local determinacy we also show how a very similar mechanism generates multiplicities in models with bonds and distortionary taxation we then explore the design of monetary policies that avoid multiple equilibria we show that interest rate policies that respond to the output gap while potentially a source of significant inefficiencies may be effective in preventing multiple equilibria and costly oscillatory equilibrium dynamics

sustainable growth renewable resources and pollution thresholds and cycles abstract ayong le kama j econ dyn control 25 2001 1911 combines within an interesting model optimal saving a la ramsey with optimal intertemporal renewable resource use a la berck j environ econ manage 11 1981 101 this note draws attention to two possible outcomes thresholds and limit cycles that are overlooked in ayong le kama but also in other recent works and that are quite important in this context

sustainable growth renewable resources and pollution abstract our intention is to present a growth model with an environmental resource which has its own regeneration process the stock of this resource serves as a source of utility and an input to production we also intend to introduce a negative externality caused by a pollution flow which we assume to be proportional to production in the context of this model it is shown that by using the utility level of the green golden rule as a generalization of the ramsey s bliss point for solving an optimal growth problems with a zero discount rate an optimal path converges to the green golden rule configuration

the ranking of negative cost emissions reduction measures a flaw has been identified in the calculation of the cost effectiveness in marginal abatement cost curves maccs the problem affects negative cost emissions reduction measures those that produce a return on investment the resulting ranking sometimes favours measures that produce low emissions savings and is therefore unreliable the issue is important because incorrect ranking means a potential failure to achieve the best value outcome a simple mathematical analysis shows that not only is the standard cost effectiveness calculation inadequate for ranking negative cost measures but there is no possible replacement that satisfies reasonable requirements furthermore the concept of negative cost effectiveness is found to be unsound and its use should be avoided among other things this means that maccs are unsuitable for ranking negative cost measures as a result maccs produced by a range of organizations including uk government departments may need to be revised an alternative partial ranking method has been devised by making use of pareto optimization the outcome can be presented as a stacked bar chart that indicates both the preferred ordering and the total emissions saving available for each measure without specifying a cost effectiveness

uncertainty and amenity values in renewable resource economics in this paper we study the effects of amenities and uncertainty on the optimal exploitation of a renewable resource first if society displays a protection motive in the presence of amenities its optimal harvesting strategy will be more conservative second we show that ecological uncertainty leads society to develop the opposite behavior thus reducing its exposition towards risk a stationary analysis is undertaken to analytically quantify and compare these two effects with a gompertz natural regeneration function and a proportional risk the amenity effect is proved to prevail if and only if stochastic fluctuations on the resource stock are not too large

thresholds in concave renewable resource models abstract a number of renewable resource models some of them just recently published e g about shallow lakes refer to convexities with respect to the resource stock as the source for multiple steady states and associated thresholds this short paper draws attention to the fact that multiple steady states and thresholds are possible in well behaved i e concave models too the ecological consequence is that renewable resource management is sensitive to initial conditions in more cases than so far suggested in the literature

population growth soil fertility and agricultural intensification abstract this paper presents a renewable resource model of soil fertility with a nonconvexity in the net benefit function in this setting recurring cycles of cropping and fallow can be the optimal soil management strategy the model is used to illuminate the boserup discussion of agricultural development in which population growth leads to agricultural intensification defined as an increase in cropping frequency previous formal models of the boserup hypothesis focus on the land labor ratio rather than cropping frequency and have not directly incorporated soil fertility dynamics these models assume a convex production technology and are not optimistic about the prospect for agricultural development without technological progress this paper explicitly models soil fertility dynamics and demonstrates that nonconvexities in the production technology are an important feature of the use of long fallow periods for soil management as population grows and the demand for food increases the importance of the nonconvexity diminishes and more frequent cropping becomes economical given a nonconvexity in the production technology it is possible though not necessary that average labor productivity increases with agricultural intensification thus it is possible to reconcile the greater labor requirement of intensive farming with an increase in average labor productivity in addition boserup argued that a larger and denser population facilitates the development of economic and social infrastructures which improve agricultural productivity

the cyclical exploitation of renewable resource stocks may be optimal abstract the purpose of this paper is to illustrate that stable limit cycles represent a possible generic equilibrium strategy in renewable resource models if the considered resource provides positive externalities this possibility which has been thus far overlooked is demonstrated for a nonlinear variant of the widely quoted model of c w clark f h clarke and g r munro econometrica 47 25 47 1979

the failure of marginal abatement cost curves in optimising a transition to a low carbon energy supply abstract one of the tools used to optimise actions in reducing the carbon intensity of the economy is to use marginal abatement cost mac curves whilst these are known to be imperfect they are widely used to prioritise actions and often in a way that is incorrect in particular whilst their use for measures which have positive costs and a net reduction in carbon emissions can correctly rank the measures for effectiveness use for ranking measures which have a net negative cost including a wide range of energy efficiency measures is entirely inappropriate and leads to perverse and incorrect outcomes as a result many assessments of low carbon actions are fundamentally flawed in their ranking of effectiveness and action is needed to overcome this and allow an optimum outcome an alternative approach is suggested here

fiscal policy elastic labor supply and endogenous growth abstract endogenizing labor supply leads to fundamental changes in the equilibrium structure of the ak growth model the balanced growth equilibrium can be described in terms of two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labor supply for fiscal policy are analyzed three issues are addressed first the effects of various distortionary tax changes and government expenditure changes on the equilibrium growth leisure employment tradeoff are analyzed second optimal fiscal policy is characterized finally the formal analysis is supplemented by numerical results focusing particularly on the quantitative welfare implications

a note on bankruptcy rules and credit constraints in temporary equilibrium in this note it is argued that bankruptcy rules and credit constraints are intrinsically related concepts bankruptcy occurs because credit is constrained by introducing the concept of a consistent credit rationing scheme it can be shown that a temporary equilibrium exists if credit rationing is consistent and if lenders have more conservative expectations with regard to the borrower s future repayment capability than the borrower

natural disasters in a two sector model of endogenous growth using an endogenous growth model with physical and human capital accumulation this paper considers the sustainability of economic growth when the use of a polluting input e g fossil fuels intensifies the risk of capital destruction through natural disasters we find that growth is sustainable only if the tax rate on the polluting input increases over time the long term rate of economic growth follows an inverted v shaped curve relative to the growth rate of the environmental tax and it is maximized by the least aggressive tax policy of those that asymptotically eliminate the use of polluting inputs unavailability of insurance can accelerate or decelerate the growth maximizing speed of the tax increase depending on the relative significance of the risk premium and precautionary savings effects welfare is maximized under a milder environmental tax policy especially when the pollutants accumulate gradually

the tragedy of the commons in international fisheries an empirical examination abstract historically all capture fisheries have proven hard to manage internationally shared stocks face an additional impediment to effective management previous fisheries studies estimate gains from cooperation for particular species or locations but evidence is lacking on the wider effect that international sharing has in relation to other variables that affect stock status this paper is an attempt to shed a broader light on the effect of sharing by identifying whether shared fish stocks are systematically more exploited i compile exploitation status biological and economic data into a unique two period panel of more than 200 fish stocks from around the globe with which i test the theoretical implications of sharing the empirical results from ordered category estimation suggest that shared stocks are indeed more prone to overexploitation

indeterminacy and increasing returns abstract we investigate properties of the one sector growth model with increasing returns under two organizational structures capable of reconciling the existence of aggregate increasing returns with competitive behavior by firms the first involves input externalities the second involves monopolistic competition we show for parameters in close accord with recent literature on real business cycles that the model displays an indeterminate steady state that can be exploited to generate a model of business fluctuations driven by self fulfilling beliefs in our first class of models growth is generated by exogenous increases in factor productivity in the second class the marginal product of capital is large enough for endogenous growth journal of economic literature classification numbers e00 e3 o40

deterioration of the terms of trade and capital accumulation a reexamination of the laursen metzler effect abstract this paper analyzes the effect of both a permanent and a temporary deterioration in the terms of trade on a small open economy the model based on intertemporal optimization emphasizes the labor leisure choice and the role of capital accumulation the transitional dynamics is shown to depend upon the long run response of the capital stock to the terms of trade shock this consists of a negative substitution effect together with a positive income effect whether or not the laursen metzler effect holds depends upon whether the income effect dominates the substitution effect

non linear dynamics of population and natural resources the emergence of different patterns of development abstract this paper studies the long term dynamic interaction between the exploitation of natural resources and population growth brander and taylor brander j a and taylor m s 1998 the simple economics of easter island a ricardo malthus model of renewable resource use american economic review 88 1 119 138 started a sequence of papers which sought to deduce from historical and archaeological studies some stylized links between ecological and economic systems in this strand of literature all the services of the natural environment are aggregated in an ecological complex which is characterized by a simple logistic dynamics given such assumptions these models show a unique long term steady state the aim of this paper is to obtain a more general framework that could account for the heterogeneity of environmental development paths followed by past societies two new assumptions are introduced i the disaggregation of the ecological complex into two different resources ii irreversibility namely an inexorable tendency to exhaustion when the renewable resource stock is below a certain threshold analysis of the dynamic properties of the system shows a multiplicity of steady states which makes it possible to consider the effects of technical progress cultural and climate changes on the resilience of the existing development path

path dependence in a ramsey model with resource amenities and limited regeneration this paper studies a ramsey optimal control economy with one consumer good extended to include several non renewable resources with amenity value the steady state equilibria of this economy are shown to form a continuum selection of the steady state to which the economy converges depends on the initial resource stocks hence unlike the usual ramsey models our model exhibits path dependency and postponement in the introduction of resource e ciency policies has long term e ects if the resource is renewable with a limited regeneration function the continuum becomes a turnpike that is optimal paths move along it towards the unique steady state the results also hold when there are several consumers 2003 elsevier b v all rights reserved

skiba thresholds in a model of controlled migration abstract this paper presents a dynamic optimization model of a central challenge of us housing policy deconcentrating poverty via housing mobility programs without inducing middle class flight we explore two versions both with and without the possibility that poor families assimilate into the middle class both demonstrate multiple equilibria with a skiba point separating initial conditions for which the optimal strategy leads to substantial flight from those leading to a stronger middle class population we also find an interesting mathematical phenomenon of a lens focusing the trajectories in a sense that allows for the coexistence of three saddles and an unstable equilibrium

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

endogenous growth and property rights over renewable resources abstract we study how different regimes of access rights to renewable natural resources namely open access versus full property rights affect sustainability growth and welfare in the context of modern endogenous growth theory resource exhaustion may occur under both regimes but is more likely to arise under open access moreover under full property rights positive resource rents increase expenditures on manufacturing goods and temporarily accelerate productivity growth but also yield a higher resource price at least in the short to medium run we characterize analytically and quantitatively the model s dynamics to assess the welfare implications of differences in property rights enforcement

indeterminacy home production and the business cycle a calibrated analysis abstract in this paper i present a business cycle model with one market sector that produces a standard good and another that produces a non market or home good the model can have multiple equilibria and therefore cycles driven only by self fulfilling expectations with low externalities to market production in particular an upward sloping aggregate labor demand as e g in farmer and guo j economic theory 63 1994 42 72 is not required for indeterminacy the effect of technology shocks is also studied in all cases the time series that are generated have properties that are comparable to the real us postwar series

an open access fishery with rational expectations explain the evolution of the fish stock and the boat fleet as well as determine their equilibrium levels 2 while the changes in the fish stock are described by a biological rule entry and exit from the fishing industry are determined by how expectations are formed we examine a general model in which entry and exit are proportional to the present value of expected profits and compare two special cases of adaptive myopic expectations and rational expectations although both expectations mechanisms lead to the same equilibrium values they lead to different adjustment paths where expectations solely depend on current values myopic expectations it is well known that boats enter the fishery only when the fish stock is greater than its steady state stock 3 with rational expectations however boats may enter when the fish stock is much lower than its steady state value provided the boat fleet is sufficiently small this difference in adjustment is observable and in principle leads to an obvious test on how agents form expectations section 2 develops a general dynamic model for studying fisheries in section 3 we show that the model standardly used in the literature is equivalent to a myopic adaptive expectations model a rational expectations model is analyzed in section 4 the standard and rational expectations models are compared in section 5 section 6 illustrates this comparison using a simulation based on a schaefer model of the pacific halibut fishery section 7 presents the conclusions

transitional impacts of environmental policy in an endogenous growth model to explore the link between a tighter environmental policy and economic growth the authors employ an endogenous growth model with endogenous technological progress in abatement technologies the environment which is modelled as a renewable resource acts both as a public consumption good and as a public input into production the entire transition towards a new balanced growth path after a tightening of environmental policy is computed analytically the authors find sharp contrasts between short run and long run effects whereas the level and the growth rate of output may decline in the short run income growth may improve in the long run copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

renewable resources in an overlapping generations economy without capital abstract we incorporate a renewable resource into an overlapping generations model without capital and with quasi linear preferences besides being an input for production the resource serves as a store of value we characterize the dynamics efficiency and stability of the steady state equilibria the stability properties are sensitive to the type of resource growth for constant growth there is only one steady state equilibrium which is stable and efficient in the general case of the concave growth function there are usually at least two steady state equilibria one of which is stable and the other one unstable the unstable steady state is efficient but the stable one may or may not be we study the robustness of our results by assuming a logarithmic utility function we show that for the cobb douglas production function the steady state is unique and stable regardless of whether the equilibrium is efficient or inefficient our analytical results are illustrated by numerical calculations

sustainability and growth when manufactured capital and natural capital are not substitutable abstract a two sector neoclassical growth model of manufactured capital and natural capital is used in examining the importance of factor substitution to the issues of sustainability and economic growth analytical conclusions are established on the sustainability of the stocks of natural capital and manufactured capital as well as on the importance of factor substitution to the issues of technical progress and recycling policy and welfare implications of the analysis are also discussed

groundwater focusing on the real issue most studies of the welfare economics of groundwater have focused mainly on the dichotomy between optimal control of groundwater use and no control at all this article argues that under circumstances that generally prevail in semiarid zones assigning property rights to groundwater and permitting the market to determine the allocation of water use can lead to a second best solution an argument is made that if potential users would be allowed to coase bargain with incumbent users on the issuance of new groundwater rights the second best solution is elevated to a pareto optimal solution this article is also a tale of two states water law and performance in new mexico and arizona

poverty trap and global indeterminacy in a growth model with open access natural resources abstract in this paper we use global analysis techniques to analyze an economic growth model with environmental negative externalities giving rise to a three dimensional dynamic system the framework is the one introduced by wirl 1997 53 the dynamics of our model admits a locally attracting stationary state p 1 which is in fact a poverty trap coexisting with another stationary state p 2 possessing saddle point stability global dynamical analysis shows that under some conditions on the parameters if the initial values of the state variables are close enough to the coordinates of p 1 then there exists a continuum of equilibrium trajectories approaching p 1 and one trajectory approaching p 2 therefore our model exhibits global indeterminacy since either p 1 or p 2 can be selected according to agent expectations moreover we prove that conditions guaranteeing the attractivity of p 1 also imply the saddle point stability of p 2 however when p 1 is not attractive numerical simulations show the possible existence of one or two limit cycles an attractive one surrounding p 1 and one endowed with a two dimensional stable manifold surrounding p 2

on the transition from local regular to global irregular fluctuations abstract we present a general framework for understanding the transition from local regular to global irregular chaotic behaviour of nonlinear dynamical models in discrete time the fundamental mechanism is the unfolding of quadratic tangencies between the stable and the unstable manifolds of periodic saddle points to illustrate the relevance of the presented methods for analysing globally a class of dynamic economic models we apply them to the infinite horizon model of woodford 1988 j economic theory 40 128 137 amended by grandmont et al 1998 j economic theory 80 to account for capital labour substitution so as to explain the appearance of irregular fluctuations through homoclinic bifurcations when parameter values are far away from local bifurcation points

renewable resources and economic sustainability a dynamic analysis with heterogeneous time preferences abstract in recent years there has been increasing interest in the study of economic sustainability and its relationship with natural resources this paper attempts to shed some light on the issue by taking into account the individual variations in time preferences for consumption and resource amenity we characterize the long run steady state analyze its asymptotic stability and explore the transational dynamics from any initial state the welfare implications of the optimal path are also discussed

renewable resources in an endogenously growing economy balanced growth and transitional dynamics abstract we introduce a renewable resource sector into an endogenous growth model of a small economy deriving the transitional dynamic equilibrium the model generates a long run equilibrium in which a resource sector of limited size can coexist with constant ongoing growth elsewhere the key feature of the model is the allocation of labor between harvesting the resource and its use in the final output sector this naturally generates the empirically observed negative relationship between resource abundance and growth we examine both the dynamic and long run responses of the economy to various shocks pertaining to technological production conditions and resource sector parameters

congestible public goods and local indeterminacy a two sector endogenous growth model abstract this paper shows that the congestible public goods can generate local indeterminacy in a two sector constant return human capital enhanced growth model while the productive public good exerts positive sector specific externalities the congestion effect generates negative aggregate externalities the sector specific externalities alone arising from productive public goods cannot establish local indeterminacy without the combination of negative externality in a model with social constant return technology congestible public good generates local indeterminacy if the degree of productive public good externality and the degree of congestion effect are large enough the condition for indeterminacy is independent of the factor intensity rankings the conditions are quantitatively assessed and the required parameter values for the degrees of public good externality and congestion are consistent with the estimated values in existing literature

environmental externalities and immiserizing structural changes in an economy with heterogeneous agents the way in which natural and physical capital are accumulated distributed and harnessed underpins the functioning and sustainability of the productive system of each society as well as its social stratification significant changes in the interactions between natural and physical capital accumulation give rise to processes of structural change sc which affect not only sectoral composition of the productive system but also social equity and environmental quality we propose a taxonomy of different scs on the basis of distributive environmental and economic outcomes and we study a two sector model with environmental externalities to identify under which conditions each sc can occur our model shows how the type of sc is shaped by the link between agents heterogeneity in terms of productive asset endowment and their vulnerability to environmental degradation in particular we find that a sc associated with reduction in poverty and in environmental pressures can occur only if productivity of the physical capital intensive sector increases but its rate of environmental impact remains relatively lower than that of the natural capital intensive sector

the policy roots of socioeconomic stagnation and environmental implosion latin america 1950 2000 abstract the persistence of growth and its equity and environmental effects heavily depend on the composition of asset investments physical human and natural capital are the key assets behind the development process market failures tend to affect the accumulation of such assets asymmetrically leading to underinvestment in human and natural capital public policy in latin america has generally exacerbated such market failures by promoting physical capital investments using massive public subsidies instead of relying on the expansion of public and semipublic assets that complement physical capital the result economic stagnation deep social inequities and environmental destruction

harvesting dynamics in protected and unprotected areas we propose a dynamic model for studying the time evolution of fish stocks in an environment divided into two adjacent zones with different fishing policies we analyze two particular harvesting methods constant fishing effort and profit maximization in this case some agents engage in competition based on maximization of individual profit whereas others cooperate the asymptotic behavior of the system pinpoints that even if the presence of a reserve area leads to higher levels of sustainability in exploiting fish stocks attention should be paid in properly regulating the harvesting activity in order to avoid severe depletion of the resource

bankruptcies in temporary equilibrium forward markets with and without institutional restrictions sufficient conditions are found for the existence of an orderly sequence of temporary equilibria in economies with incomplete forward markets without exogenous limits on short sales in the absence of institutionally imposed trade restrictions equilibrium exists under the assumption of overlapping expectations in the institutional model a clearinghouse imposes rules of trade interpreted as margin requirements to reduce the likelihood of bankruptcies under this rule equilibrium exists without overlapping expectations and subsequent bankruptcies are less likely

can environmental taxation stimulate growth the role of indeterminacy in endogenous growth models with environmental externalities abstract this paper examines the effects of environmental taxation on long run growth in an infinitely lived representative agent model of endogenous growth with negative pollution externalities the novelty of this paper lies in its investigation of how the long run effects of environmental taxes are affected by the possible emergence of indeterminacy of equilibria in romer s 1986 increasing returns and long run growth journal of political economy 94 1002 1037 learning by doing model with endogenous labor supply the analysis shows that environmental taxation generally enhances harms long run growth when the balanced growth path is indeterminate determinate

on endogenous formation of price expectations abstract we study a two period exchange economy with complete financial markets and endogenous borrowing constraints contrary to perfect foresight paradigm we assume that agents are heterogeneous in their ability to forecast future prices we introduce a new equilibrium concept called informationally constrained equilibrium where the formation of price expectations is endogenous and reflects the revelation of information from observing bounds on liabilities designed to ensure solvency at any contingency we prove that under standard assumptions an equilibrium always exists and we characterize the degree of information revealed by the endogenous debt limits

a metapopulation model with private property and a common pool abstract a metapopulation illustrated by barnacles has a spatial distribution and a two stage life cycle in the model developed here space limits expansion introducing a profitable harvest activity of adults leads to harvest at only one site a solution driven by biological increasing returns the model is of interdisciplinary interest because the natural resource has common property characteristics in its larval stage but a private property character in its adult stage the model permits economic valuation of lost habitat

conservationist government policies and intergenerational equity in an overlapping generations model with renewable resources abstract this paper shows that in overlapping generations models incorporating renewable natural resources competition may lead to perpetually declining living standards in environments in which it is technically feasible to achieve intergenerationally equitable distributions of consumption first and second best conservationist government policies are examined these include forced nationalization of the entire stock of natural capital government open market purchases and sales of natural capital taxation of industrial use of resources and subsidies to private investments in natural capital

the impact of global warming on agriculture reply in our paper with daigee shaw mendelsohn et al 1994 henceforth mns we developed a new approach to measuring the impact of global warming on agriculture we call this approach ricardian because it relies upon standard rent theory as a way of identifying the impact of changes on net economic welfare we compared the ricardian approach with the traditional production function approach which uses agricultural production functions but has great difficulty identifying all the other adjustments that farmers make in response to changing external conditions the ricardian approach is particularly well suited to a tremendously heterogeneous sector because it can rely upon reduced form estimation and does not require the impossible task of constructing structural models of hundreds of crops in thousands of locations estimating the model using cross sectional data on climate farm land prices and other economic and geophysical data for almost 3 000 counties in the united states the ricardian approach shows a significantly lower estimated impact of global warming than the traditional productionfunction approach indeed our preferred statistical approach showed modest benefits of climate change in his comment on mns in this issue of the review william r cline 1996 raises three concerns first he notes that the analysis assumes that output prices remain constant second he asserts that the analysis assumes that the supply of water for irrigation is perfectly elastic third he calls for testing the results of the model on alternative climate scenarios from general circulation models gcm s his first and third points are useful additions while the second is incorrect our ricardian approach assumes that the existing pattern of agricultural land rents and land prices reflects the long run equilibrium economic effect of climate and other geophysical and economic variables standard economic reasoning shows that by calculating the estimated effects of perturbing the climatic variables we can project the impact of climate change on economic welfare we do so in a partial equilibrium approach which assumes that output prices are invariant to the climate and cline is correct to point out that this might lead to biased estimates because the partialequilibrium estimates tend to underestimate damages and overestimate benefits in fact the bias is small given standard parameters for agricultural demand and supply functions we illustrate this point using linear supply and demand functions for agricultural crops let demand be given by qd ao a1p while supply is q po pi p where q and p are output and price and ai and i are parameters in equilibrium at the old climate market outcomes are qo and po now suppose that global warming contracts supply so that

sustainable growth with environmental spillovers in this paper we apply the approach of ramsey and koopmans to the problem of optimal and sustainable growth under plausible assumptions intertemporal neutrality implies that the optimal growth path is sustainable without the contrivance of a sustainability constraint the model is extended to cases involving environmental disamenities the solutions equivalently solve the problem of maximizing net national product adjusted for depreciation in natural capital and environmental effects green net national product in this framework is constant over time thus avoiding the paradox of declining sustainable income

non separable utility function and indeterminacy of equilibrium in a model with human capital abstract this paper shows that non separability of utility function may produce indeterminacy of equilibrium in the representative agent models with labor leisure choice by using a two sector model of endogenous growth we show that if the utility function is not additively separable between consumption and leisure indeterminacy may emerge even in the absence of external increasing returns

optimal growth with renewable resources and pollution abstract this paper presents three models which combine the optimal dynamics of economic growth renewable resource harvesting and pollution we investigate growth pollution and renewable resources as a three state variable problem the economy has three inputs man made capital renewable resources and emissions endogenous pollution affects both the growth of the renewable resource stock and the social welfare it is shown that the existence of the steady state depends in a complicated manner and in addition to preferences on the production technology growth of the renewable resource and the rate of decay of pollution the sufficient conditions for the existence of a global saddle point are given conditions under which the market solution equals the optimal solution of the social planner and the consequences of a too low externality tax on emissions or on common property resource harvesting are discussed

contracting problems and regulation the case of the fishery the inefficiencies of common property fisheries are of continuing concern to economists the early work by scott gordon 1954 and anthony scott 1955 outlined the problem and later studies by james crutchfield and giulio pontecorvo 1969 and frederick bell 1972 provided empirical estimates of the losses that result those studies were followed by the dynamic models of colin clark 1976 and james quirk and vernon smith 1970 of optimal harvest rates and the use of corrective taxes or quotas to achieve them but in spite of a large and growing literature and the persuasiveness of the outlined efficiency criteria most fisheries retain common property aspects with overcapitalization and excessive labor input why those conditions persist and the failure of the regulatory response to them are the issues addressed in this paper we examine a number of fisheries but focus on the texas shrimp industry which is one of the nation s most valuable fisheries for a single species and which shares the common property characteristics observed elsewhere it is considered overcapitalized and catch per unit of effort is falling 2 examination of the fishery reveals the many margins along which rent dissipation occurs and the nature of the regulations necessary for controlling fishing effort to avoid those losses the regulatory environment in texas is complicated by conflict within the fishery between inshore and offshore fishermen the latter assert that bay shrimping reduces the number of shrimp that successfully migrate to the gulf the inshore fishery is highlighted by another issue the recent resettlement of some 30 45 000 vietnamese refugees including many fishermen along the texas coast marine advisory service paul starr their entry has been met by hostility and violence from existing shrimpers who recognize that they are in an environment characterized by the absence of property rights bay shrimpers have lobbied the texas legislature for broad limits on new entrants yet ironically the sale of additional boats by individual shrimpers to the vietnamese has facilitated entry of the refugees into the fishery regulations in the texas shrimp and other fisheries are incomplete leaving many options for rent dissipation uncontrolled because of high contracting costs among fishermen and political factors that mold government actions contracting costs are high among heterogeneous fishermen who vary principally with regard to fishing skill 3 montana state university and texas a m university respectively we benefitted from comments by terry anderson raymond c battalio gardner brown oscar burt micha gisser wade griffin john r moroney anthony d scott peter temin and participants in workshops at texas a m university and the university of washington research assistance was provided by scott barnhart and phil mizzi funding was provided by sea grant texas a m university throughout this paper we use the terms common property and open access interchangeably here the terms describe a situation where no property rights group or individual exist s for the resource 2catch per unit of effort in the inshore texas gulf and federal gulf waters is presented for 1963 77 by w l griffin c g tydlacka and w e grant they show catch per unit of effort generally falling in inshore and offshore waters while catch per unit of effort fluctuates from year to year it falls from approximately 360 kg shrimp per unit of effort to 220 kg from 1963 to 1977 the common property nature of the fishery is reflected in the following statistics since 1975 the number of vessels has grown by 23 percent nelson swartz for fish houses the record of entry is similar between 1970 a d 1977 the number of firms grew from 259 to 287 though during that period many left the industry as others entered the number of fish houses was calculated from license data supplied by the texas parks and wildlife department the record of entry by fish houses suggests that monopsony as discussed by colin clark and gordon munro is absent in the fishery 3there may be minor differences in labor leisure choices and capital but our statistical evidence and discussions with fishermen indicate that catch variations are largely due to skill government regulations in the texas bays restrict capital and our empirical evidence shows boats to be relatively homogeneous

the y factor for climate change abatement a method to rank options beyond abatement costs abstract the tools available to translate climate targets into abatement actions are mainly based on costs and technical feasibility options for greenhouse gas abatement span all sectors all countries and involve a huge variety of technologies the reasons for abatement to be realized or not are diverse and complex in particular the political discussion why many affordable options do not materialize is naive and ad hoc here we show the y factor an approach for a quick scan of abatement options against a set of prominent abatement barriers we define 12 factors which capture a broad set of barriers related to 1 costs and financing 2 multi actor complexity 3 physical interdependencies and 4 behaviour we rank 24 abatement options using an explicit but coarse scoring for these barriers we show that all abatement options have implementation barriers many of which may well drastically impact their implementation beyond what would be expected from their abatement costs the analysis implies that the relation between abatement costs and the barriers withholding implementation is not straightforward and calls for a deliberate policy debate on prioritization and policy intervention the y factor structures such a policy debate