Economic growth and property rights on natural resources

Abstract

We consider two models of economic growth with exhaustible natural resources and agents heterogeneous in their time preferences. In the first model, we assume private ownership of natural resources and show that every competitive equilibrium converges to a balanced-growth equilibrium with the long-run rate of growth being determined by the discount factor of the most patient agents. In the second model, natural resources are public property and the resource extraction rate is determined by majority voting. For this model we define an intertemporal voting equilibrium and prove that it also converges to a balanced-growth equilibrium. In this scenario the long-run rate of growth is determined by the median discount factor. Our results suggest that if the most patient agents do not constitute a majority of the population, private ownership of natural resources results in a higher rate of growth than public ownership. At the same time, private ownership leads to higher inequality than public ownership, and if inequality impedes growth, then the public property regime is likely to result in a higher long-run rate of growth. However, an appropriate redistributive policy can eliminate the negative impact of inequality on growth.

Collective Choice with Heterogeneous Time Preferences

“…Hence this approach to voting can be used in dynamic general equilibrium models with standard felicity and production functions where agents differ in their time preferences. Borissov et al (2014) study voting over environmental maintenance tax, Borissov and Pakhnin (2018) consider voting over the rate of extraction of exhaustible resources, and Borissov et al (2019) study voting over the shares of public goods in total output. In all cases, equilibrium policy sequences are determined by the agent with the median discount factor.…”

Collective choice with heterogeneous time preferences

“…22 This example suggests that intertemporal majority voting can be successfully applied in dynamic general equilibrium models with log-felicity functions and Cobb-Douglas production technology where agents differ in their time preferences. Borissov et al (2014) study voting over environmental maintenance tax; Borissov and Pakhnin (2018) study voting over the rate of extraction of exhaustible resources. In both cases, equilibrium policy sequences are determined by the median discount factor.…”

“…Borissov et al. (2014) study voting over environmental maintenance tax; Borissov and Pakhnin (2018) study voting over the rate of extraction of exhaustible resources. In both cases, equilibrium policy sequences are determined by the median discount factor.…”

A Division of Society into the Rich and the Poor: Some Approaches to Modeling

“…Здесь теория экономического роста встречается с теорией общественного выбора. В последнее время активно развиваются модели динамического голосования (см., например, (Borissov et al, 2017;Borissov, Pakhnin, 2018)). Исследования политэкономических механизмов делают только первые шаги, но можно надеяться, что дальнейшие работы смогут внести вклад и в изучение динамики неравенства.…”