Three Essays on Natural Resources, Climate Change and Economic Growth

This thesis contains three main chapters that explore various issues related to natural resources, climate change and long-term economic growth. In Chapter 2, we examine the conditions under which endogenous long-term economic growth will emerge in an overlapping-generation model with productive non-renewable resources. We formally prove that the elasticity of substitution between labour and natural resource input plays a crucial role in generating endogenous long-term economic growth. In Chapter 3, we examine how the substitutability between renewable and non-renewable resources will affect long-term economic growth. To achieve this, we develop two discrete-time endogenous growth models with both renewable and non-renewable natural resources. These two types of resources enter into the production function through a constant-elasticity-of-substitution (CES) aggregator. The ease or difficulty in substituting between these two inputs is then captured by a single parameter, namely the elasticity of substitution. We then analyse how changes in this elasticity will affect long-term economic growth. Finally, in Chapter 4, we develop a multi-sector neoclassical growth model to analyse the effects of climate change on economic growth and the allocation of productive inputs and outputs across sectors. A novel feature of this model is that it takes into account the differential impact of global warming on agricultural and non-agricultural productivity growth. In particular, the effect of climate change on long-run growth is well-characterised. However, the impacts on long-run allocation of labour across sectors as well as value-added shares are ambiguous due to ambiguity effect of the climate impact on capital return.