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Constant Consumption and the Economic Depreciation of Natural Capital: The Nonautonomous Case
Author(s) -
Hartwick John M.,
Van Long Ngo
Publication year - 1999
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.00004
Subject(s) - depreciation (economics) , economics , consumption of fixed capital , consumption (sociology) , capital (architecture) , capital consumption allowance , constant (computer programming) , monetary economics , microeconomics , macroeconomics , capital formation , financial capital , profit (economics) , social science , archaeology , sociology , computer science , programming language , history
We investigate economic depreciation of natural capital for cases of nonstationary output prices, technology, and interest rates. For the former two cases (exogenous movements in prices and technology), constant consumption emerges under a strategy of investing to cover off economic depreciation. The interest rate case requires a modified sinking fund strategy.