Exhaustible Natural Resources and Garbage Dump: What Is Sustainable Development? A Dynamic Model

This paper discusses the question of whether or not an economy that depends on exhaustible resources can possibly attain sustainable development. In section II, we consider an economy with two kinds of exhaustible resources, namely, exhaustible natural resource and garbage dump. The two kinds of resources will be exhausted according to the Hotelling´s rule. We explore how they are interrelated. In section III, we discuss international trade in a two-factor two-country model. We show the optimal volume of trade, and the optimal consumption path by means of an Edgeworth Box diagram. The final section concludes.