Category Archives: Macroeconomic Theory

The Maximum Duration of Constant Consumption

At what rate should an essential non-renewable resource be depleted to sustain an economy for as long as possible?  Suppose the inputs of a closed economy consist of produced capital, a non-renewable resource and labour .  Output is of a … Continue reading

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An Inconvenient Truth about the Hartwick Rule

The relevance to the Hartwick Rule of depreciation of produced capital is not widely understood. Suppose the inputs of a closed economy consist of produced capital K, a non-renewable resource R and labour L.  It produces a single good which … Continue reading

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Improving on GDP

The winning entries for the Indigo Prize highlight both the importance of improving economic statistics and some of the challenges of doing so. The launch of the Indigo Prize by LetterOne is a welcome initiative which recognises both the limitations … Continue reading

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A Difficulty in Assessing Sustainability

Long-term forecasting of the aggregate production function is essential for assessing sustainability, but very difficult. Is our current living standard sustainable?  Or does depletion of non-renewable natural resources such as fossil fuels and metal ores mean that it must eventually … Continue reading

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