Long-Run Consequences of Population Decline in an Economy with Exhaustible Natural Resources

Abstract

This study explores how population decline affects the long-run performance of an economy in which exhaustible natural resources are indispensable in the process production. Using a one-sector neoclassical growth model with external increasing returns, we inspect the conditions under which the per capita income and consumption persistently expand in the long-run equilibrium. We find that it is population decline, rather than exhaustible resources, that might terminate persistent growth in per capita income and consumption.