Technological Change in Resource Extraction and Endogenous Growth

Bonn Econ Discussion Papers 12/2013

50 Pages Posted: 7 Dec 2013

See all articles by Martin Stuermer

Martin Stuermer

Federal Reserve Bank of Dallas, Research Department

Gregor Schwerhoff

Mercator Research Institute on Global Commons and Climate Change (MCC)

Date Written: November 2013

Abstract

We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Extractive firms reduce the stock of non-renewable resources through extraction, but also increase the stock through R&D investment in extraction technology. Our model replicates long-term trends in non-renewable resource markets, namely stable prices and exponentially increasing extraction, for which we present data from 1792 to 2009. The model suggests that the development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries like China in the long term.

Keywords: non-renewable resources, endogenous growth, extraction technology

JEL Classification: O30, O41, Q30

Suggested Citation

Stuermer, Martin and Schwerhoff, Gregor, Technological Change in Resource Extraction and Endogenous Growth (November 2013). Bonn Econ Discussion Papers 12/2013, Available at SSRN: https://ssrn.com/abstract=2364046 or http://dx.doi.org/10.2139/ssrn.2364046

Martin Stuermer (Contact Author)

Federal Reserve Bank of Dallas, Research Department ( email )

2200 N. Pearl St
Dallas, TX 75201
United States

HOME PAGE: http://https://sites.google.com/site/mstuermer1/

Gregor Schwerhoff

Mercator Research Institute on Global Commons and Climate Change (MCC) ( email )

Torgauer Stra├če 12-15
Berlin, 10829
Germany

HOME PAGE: http://www.mcc-berlin.net/ueber-uns/team/schwerhoff-gregor.html

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