Natural resources and patterns of overtaking

Volker Böhm, Tomoo Kikuchi, George Vachadze

Research output: Contribution to journalArticlepeer-review

Abstract

This paper shows how intergenerational trading of non-depletable natural resources may affect investment in physical capital, implying distinct patterns of overtaking between countries. Specifically, the results indicate that the elasticity of the marginal utility of natural resources plays a crucial role. When the elasticity is less than unity, a resource-abundant country may be overtaken by a resource-scarce country. In this case, savings are withdrawn from productive investment to acquire natural resources. Conversely, when it is greater than unity, the reverse pattern of overtaking may occur since investment in natural resources and in physical capital go hand in hand.

Original languageEnglish
Pages (from-to)167-177
Number of pages11
JournalInternational Journal of Economic Theory
Volume10
Issue number2
DOIs
Publication statusPublished - 2014 Jun
Externally publishedYes

Keywords

  • Overtaking
  • Sep natural resources
  • Sep overlapping generations model

ASJC Scopus subject areas

  • Economics and Econometrics

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