| Budget Amount *help |
¥1,300,000 (Direct Cost: ¥1,300,000)
Fiscal Year 2001: ¥700,000 (Direct Cost: ¥700,000)
Fiscal Year 2000: ¥600,000 (Direct Cost: ¥600,000)
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| Research Abstract |
This Research has examined if or not economics endowed with exhaustible or renewable resources are able to keep their consumption levels constant throughout different generations and if so, under what rule the resources are to be excavated. The research method is one of the theoretical analyses utilizing optimal control theory that has been exploited since the 1970s for economic analysis of resources. However, contrary to the existing literature, this research treats uncertainty with an aid of optimal stochastic control. As the result of our broad investigation on resource economies, we have come to convince that the resource price should be the most appropriate variable to be randomized when uncertainly matters to formalize theoretical models. Thus, a stochastic process following a Brownian motion has been used in this research to express the resource price. Compared with existing studies, it has been made clearer that the price becomes more uncertain toward future as time goes by. We have obtained the following new findings by our research for the two years.
1. The research in the 2000 academic year has shown that, if the variance of resource price is an increasing function of time, regardless of whether the resource is exhaustible or renewable, Hartwick's rule on consumption sustainability should be modified to include a term for adjusting capital gains (or losses) over past periods.
2. The research in the 2001 academic year has shown that departing from the Hartwick rule, for maximizing the discounted sum of profits derived from excavated resources, confined to renewable resource, the optimal resource stock level at steady state may be larger or smaller than the stock level corresponding to the maximum renewable rate of the resource, but it becomes smaller if the resource stock does not affect excavating costs, and it is equal to the latter if the rate of time discount is zero.
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