Growth with endogenous resource use and population growth

In growth models, natural resources are frequently treated as an exogenous factor. Moreover, the relationship between non-renewable resources and population growth has not been examined thoroughly. This paper develops a growth model where resources and the fertility rate are determined endogenously. The availability of resources is treated as a function of labour employed to explore new reserves and develop substitutes for depleted resources. The agents optimise their fertility rate by trading-off the quantity of children for their quality. In the long run, it is found that the inflow of newly available resources is an essential factor that determines per capita consumption. We show that the long-run sustainability of growth does not rely on the Inada condition with respect to resource inputs. It is also demonstrated that a quasi-Malthusian population constraint is feasible, even with potentially unlimited resources.