Renewable Resources in an Overlapping Generations Economy Without Capital

30 Pages Posted: 23 Oct 2000

See all articles by Erkki Koskela

Erkki Koskela

University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute); Bank of Finland - Research Department; IZA Institute of Labor Economics

Markku Ollikainen

University of Helsinki - Department of Political and Economic Studies

Mikko Puhakka

University of Oulu - Department of Economics

Date Written: September 2000

Abstract

We incorporate a renewable resource into an overlapping generations model without capital and with quasi-linear preferences. Besides being an input for production the resource serves as a store of value. We characterise the dynamics, efficiency and stability of the steady state equilibria. The stability properties are sensitive to the type of resource growth. For constant growth there is only one steady state equilibrium which is stable and efficient. In the general case of the concave growth function there are usually at least two steady state equilibria, one of which is stable and the other one unstable. The unstable steady state is efficient, but the stable one may or may not be. We study the robustness of our results by assuming a logarithmic periodic utility function. If the stationary equilibrium is unique, it is stable regardless of whether the equilibrium is efficient or inefficient, and irrespective of the type of growth function. Our analytical results are illustrated by numerical calculations.

Keywords: Overlapping generations, renewable resources

JEL Classification: D90, Q20

Suggested Citation

Koskela, Erkki and Ollikainen, Markku and Puhakka, Mikko, Renewable Resources in an Overlapping Generations Economy Without Capital (September 2000). FEEM Working Paper No. 67.2000. Available at SSRN: https://ssrn.com/abstract=243910 or http://dx.doi.org/10.2139/ssrn.243910

Erkki Koskela (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland
+358 9 191 8894 (Phone)
+358 9 191 8877 (Fax)

HOME PAGE: http://www.cesifo.de/servlet/page?_pageid=56&_dad=portal30&_schema=PORTAL30&pa_id=7298

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Bank of Finland - Research Department ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Markku Ollikainen

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

Mikko Puhakka

University of Oulu - Department of Economics ( email )

PO Box 4600
FIN-90014 University of Oulu
Finland

Register to save articles to
your library

Register

Paper statistics

Downloads
117
Abstract Views
1,540
rank
241,502
PlumX Metrics