Growth on a Finite Planet: Resources, Technology and Population in the Long Run

CER-ETH Working Paper No. 11/147

40 Pages Posted: 5 Jul 2011

See all articles by Pietro F. Peretto

Pietro F. Peretto

Duke University - Department of Economics; Duke Innovation & Entrepreneurship Initiative

Simone Valente

Norwegian University of Science and Technology (NTNU)

Multiple version iconThere are 3 versions of this paper

Date Written: June 30, 2011

Abstract

We study the interactions between technological change, resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility. There exists a pseudo-Malthusian equilibrium in which population is constant and income grows exponentially: the equilibrium population level is determined by resource scarcity but is independent of technology. The stability properties are driven by (i) the income reaction to increased resource scarcity and (ii) the fertility response to income dynamics. If labor and resources are substitutes in production, income and fertility dynamics are self-balancing and the pseudo-Malthusian equilibrium is the global attractor of the system. If labor and resources are complements, income and fertility dynamics are self-reinforcing and drive the economy towards either demographic explosion or human extinction. Introducing a minimum resource requirement, we obtain a second steady state implying constant population even under complementarity. The standard result of exponential population growth appears as a rather special case of our model.

Keywords: Endogenous Innovation, Resource Scarcity, Population Growth, Fertility Choices

JEL Classification: E10, L16, O31, O40

Suggested Citation

Peretto, Pietro F. and Valente, Simone, Growth on a Finite Planet: Resources, Technology and Population in the Long Run (June 30, 2011). CER-ETH Working Paper No. 11/147, Available at SSRN: https://ssrn.com/abstract=1875474 or http://dx.doi.org/10.2139/ssrn.1875474

Pietro F. Peretto (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
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Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Simone Valente

Norwegian University of Science and Technology (NTNU) ( email )

Department of Economics
NTNU Dragvoll
Trondheim NO-7491
Norway

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