Keywords: renewable resources, elastic labour supply, sustainable economy, growth modelling, economic structure, land distribution, sustainable development, sustainability, capital dynamics, resource dynamics, simulation, total productivity, neoclassical growth model, housing, agriculture
Renewable resource and capital dynamics and elastic labour supply in a neoclassical growth model with housing and agriculture
This paper proposes an economic growth model to provide some insights into issues related to sustainable economy with capital and resource dynamics. The model combines the main economic mechanisms in the Solow growth model, the Ricardian two–sector economic model, and the logistic model in resource economics in a compact framework. We simulate the model, identifying the existence of two steady states, the one with higher value of the resource is locally stable and the other one is a saddle point. We also conduct comparative dynamic analysis near the dynamic path with the stable steady state with regard to changes in the industrial sector's total productivity, the propensities to consume the resource, to consume housing and to save. Our model also predicts some results different from the growth model with renewable resource, for instance, by Eliasson and Turnovsky (2004).