Characterizing sustainability: The converse of Hartwick's rule

✍ Scribed by Cees Withagen; Geir B. Asheim

• Publisher: Elsevier Science
• Year: 1998
• Tongue: English
• Weight: 102 KB
• Volume: 23
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(97)00109-7

✦ Synopsis

This note offers a general proof of the converse of Hartwick's rule, namely thatin an economy with stationary instantaneous preferences and a stationary technologyan efficient constant utility path is characterized by the value of net investments being zero at each point in time. In a one consumption economy with two stocksa stock of a natural resource and a stock of man-made capitalthis means that if consumption remains constant at the maximum sustainable level, then the accumulation of man-made capital always exactly compensates in value for the depletion of the natural resource.