Year: 2024
Type: article
Abstract: Optimal depletion of nonrenewable energy added to the neoclassical model dampens economic growth as its price rises at the rate of the capital return. The present paper introduces sustainable energy requiring its own capital with the Inada condition requiring both energy inputs are necessary for production. Production is developed in terms of factor shares and price elasticities. Investment in sustainable energy offers relief from the rising nonrenewable price but lowers consumption or capital growth. Simulations of the U.S. economy foresee a smooth transition with growth paths depending on the two saving rates and factor price substitution.
Author: Henry Thompson
Institution: Auburn University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4405178049