Three essays on theories of economic growth, resource development and climate change

Abstract

This thesis is a collection of essays on theories of economic growth, resource development and climate change. The first essay (Chapter 2) studies the fundamental dynamic properties of stochastic optimal growth models with capital and elastic labour supply. It provides conditions on the primitives of the model under which the optimal policy functions are existent, unique, continuous and monotone. Second, it provides conditions under which the distribution of income converges to a unique invariant probability measure independent of initial income. It also studies when the law of large numbers and central limit theorem hold for functions of income, investment and labour. The second essay (Chapter 3) develops a theoretical model to study the resource curse. In a general equilibrium framework, it relates poor economic performance to the existence of social fractionalisation, market frictions and resource-related conflicts. When resources are monopolised by the elite, exports lead to the under-provision of public resource goods for domestic production. This lowers the marginal return to productive activities, and consequently, insurgency emerges as the civilians' default activity. The resultant conflicts further displace resources and labour, and bring the economy into a vicious cycle. The third essay (Chapter 4) proposes a non-probabilistic approach to the analysis of international climate policies. It argues that issues associated with climate change are historically unprecedented, and thus policymakers do not have a prior distribution over possible outcomes. Therefore, the theoretical framework based on maximising expected utility is not well defined. Under the alternative assumption that policymakers act strategically, but choose the policy that allows the highest possible gain in the worst-case scenario, this essay shows how multilateralism can be inferior to unilateralism in both carbon mitigation and loss minimisation. Hence, it is not appropriate to judge the success of global climate talks in terms of country engagement and reduction commitment. -- provided by Candidate.