Complementarity,impatience, and the resilience of natural-resource-dependent economies |
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Authors: | Martin F Quaas Daan van Soest Stefan Baumgärtner |
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Institution: | 1. Department of Economics, University of Kiel, Wilhelm-Seelig-Platz 1, 24118 Kiel, Germany;2. Department of Spatial Economics and IVM, VU University Amsterdam, and Department of Economics, Tilburg University, The Netherlands;3. Department of Sustainability Science and Department of Economics, Leuphana University of Lüneburg, Germany |
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Abstract: | We study how society's preferences affect the resilience of economies that depend on more than one type of natural resource. In particular, we analyze whether the degree of complementarity of natural resources in consumer preferences may give rise to multiple steady states and path dependence even when resources are managed optimally. We find that, for a given social discount rate, society tends to be less willing to buffer exogenous shocks if resource good are complements in consumption than if they are substitutes. The stronger the complementarity between the various types of natural resources, the less resilient the economy is, and even more so the higher is the social discount rate. |
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Keywords: | Resilience Substitutes and complements Discounting Multiple steady states Natural resources Path dependence Regime shifts Tipping points |
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