Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model

Abstract:     
In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwick's rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwick's rule.

Number of Pages in PDF File: 15

Keywords: Intertemporal equity, exhaustible resource, Hartwick's rule, Hotelling's rule

JEL Classification: D90, O11, O41, Q32

Accepted Paper Series