20

The annual growth rate of the global population has been in decline since about 1967 (five decades ago). The absolute annual growth peaked in 1987 (three decades ago). Malthusians claim that: population growth is geometric or higher; and food production growth is arithmetic or lower. If either of those do not hold, then Malthusian theory does not hold. ...


14

The book Information Rules by Google Chief Economist Hal Varian (with Carl Shapiro) deals with many issues raised by the particular features of the digital economy. In general, he finds you don't need new models, and that things are well approximated by high fixed and low or zero marginal cost of production.


12

My understanding of the recent drop in oil price is due to recent changes in US drilling. They are now the worlds largest oil producer. This article by the economist does a good job explaining. My answer (borrowed very heavily from the economist.) Demand is low because of weak economic activity, increased efficiency, and a growing switch away from oil to ...


8

Your broad idea is right. Since the marginal cost of reproducing digital goods is essentially zero, there is a sense in which is appears optimal to give the good to any consumer who has a positive value for it. In this sense, such goods are superficially non-scarce. However, there are some important caveats to this line of reasoning that results in the goods ...


7

The Malthusian crisis has two parts. The first is exponential population growth. As others have noted, there is a trend for declining fertility once countries achieve an advanced state of development. Here's another figure showing this fact: Note that fertility (number of children per adult female) is decreasing essentially everywhere, and is forecast to be ...


7

This is the cost curve of oil production (North American shale at $65): Source And this is the cost curve of major American projects: Source While "Citi's Ed Morse highlighted this chart, showing that for most US shale plays, costs are below $80 a barrel." And clearly, many of these new projects would lead to losses with oil prices at $60: Source The ...


6

An oil price of 0 will make any extraction of oil unprofitable and hence imply no further oil extraction. You should think about how prices carry signals. A low oil price (even if not 0) carries the signal that we, as society, do not value that oil as much. The conclusion is imminent.


5

Use or consumption of natural resources is not in mainstream economics considered as an externality per se. First of all the quote from Mankiw is probably from undergraduate textbook and taken out of context as it is incomplete. For example according to Economics by Mankiw and Taylor (2014) 3rd ed the externality is defined as: the cost or benefit of ...


4

The purpose of the paper under consideration is to examine/show the "investment rule" that leads to "intergenerational equity", which with constant population translates into constant consumption. The investment rule under examination is (last line of p. 973) "invest all net returns from exhaustible resources in reproducible capital" (and consume the rest)....


4

I think the answer of @EnergyNumbers covers most of the important points but I would like to emphasize something else. When setting up a model you should not give the same weights to data from 500 years ago as you give to the data of last year. Since circumstances can change a lot in that time the trends may change as well. For example world population was ...


4

It's an analogy. The Saudi economy as an analogy for the Australian economy. Like any other analogy, you can stretch it to a certain point, but then it breaks. The article sets out the ways in which the analogy holds. Stretching it further will probably break it. Let's look at how the article says the analogy holds: both economies have a significant ...


4

What would be economically most efficient is that for the price of oil to reflect all its costs, including all the pollution costs. A price that high would destroy a lot of demand, and incentivise all the cleaner alternatives with less need to subsidise them. Professor Jeff Sachs has spoken emphatically of the advantage of a low oil price, for the COP21 ...


4

The other excellent answers provided data - mine will provide a simple look into at what stage we are, if Malthusian Theory holds. I replicate here the first graph of the OP: For the graph to be meaningful, "resources" in it must be measured in "number of people that can be sustained by existing resources". To the degree that the amount of resources ...


4

You're correct that just because 1% of the economy is in mineral extraction, doesn't mean that stopping it would reduce global GDP by 1%. Similarly, roughly 10% of global GDP is on energy expenditure, and about the same on food, but if we stopped either of those, global GDP drops to pretty much zero. Do bear in mind that we will stop using coal, oil and gas ...


3

This is a single-good model, that is, output is of one good which can be either consumed or added to capital. The dynamic optimisation problem is to maximise the discounted present value of utility, utility being a function of consumption meeting the standard conditions $U_C > 0$ and $U_{CC} < 0$. Perman et al identify the second of two state ...


3

It would be easy enough to subject the question to simple quantitative analysis - get the time-series of historical oil prices and away we go. Or, we can take a quick qualitative approach and get the same answer: The Rule just sets out what the most economically efficient path would be. That's nothing at all to do with how things happen in reality: it's ...


3

over the past few months, the oil harvested from fracking had come onto the market reducing the price of gas. Obviously, this makes no sense insofar as the oil harvested from fracking displaces oil harvested by other means. Absent changes in supply or demand, the price of oil has to rise at the rate of interest. The development of a new extraction ...


3

Considering oil as a commodity that does not expire and can be relatively easily stored, I believe the reason for the recent price drop of oil is much more political than what it has to do with economics. Russia is a giant producer of crude oil and its governmental operation fund is tightly related the export tax of oil. By lowering the price of oil, the ...


3

The basic factors in the decline of petroleum prices is the increased production in the US in the North Dakota and Texas shale oil fields as a result of the use of hydraulic fracturing in conjunction with horizontal drilling (up to 2 miles horizontal in a single borehole. Furthermore, the Saudi Petroleum Minister chose not to reduce their output in order to ...


3

I'll go ahead and admit that I do not have any empirical evidence, and this is more of factor to consider when evaluating future movement in the oil market. As oil prices drop, some US oil producers will find continued exploration and production unprofitable. This will serve as a counter balance to the falling prices aa producers choose to reign in supply. ...


3

Let us just assume, without any loss of generality, that it is OPEC nations who can produce oil most cheaply. That is, the cost per barrel for all OPEC nations is homogeneous and is lower than the cost per barrel for any other oil producing nation or entity. Then OPEC can continue to allow the price of oil per barrel to fall until other oil producing ...


3

I don't think it's any more complicated than looking at the ratio of global oil consumption and global Gross Domestic Product. The OECD, World Bank, IMF and others produce estimates of each. There is some fuel-switching: for example, the world burns much less electricity from oil than it used to: in 1973 (the first oil crisis started around October that ...


3

Someone still has to build the app or ebook. In other words, these products are characterized by large fixed costs of production and low variable costs. The marginal cost is positive because there exists a small distribution cost (such as internet bandwidth or maintenance of a website).


3

I see both Economic Geography and Ecological Economics as different. Economic Geography is the study of the determinants and effects of the spatial distribution of economic activity. Economic Geography is considered as a sub-field of economics, so it's applying standard economic thinking to the geography. In particular, Paul Krugman studied the location of ...


3

The claim is definitely not trivial, otherwise we would not observe frequent draughts due to government subsidies (like drought in California that is at least partially caused by bad water and farming subsidies), environmental degradation and overuse due to subsidies to coal mining and oil production (see this IMF explainer), not even mentioning that often ...


2

This started as a comment on Stephen Landsburg's answer but was getting too long for the comment format. When a new supply of oil is discovered, it increases the potential new supply. This will cause prices of oil fields to fall (if everything else is constant). However, gasoline costs are determined not by the future supply but by current supply. ...


2

I think you could have posted the question in a simpler manner. The exhaustible resource stock has nothing to do with the question. It is just the basic Euler equation in canonical Solow growth model. Basically, if your pure rate of time preference $\rho$ (equivalently, your patience level) is higher than the interest rate of capital ($\rho>Q_{k}$), it ...


2

I got stock with this problem for days. The fact is that in a statical analysis, increasing $Q_K$ reduces consumption. But in a dynamic analysis, increasing $Q_K$ means more capital is saved and hence next year an higher production function that allows for more consumption than today, hence, a positive growth rate of consumption.


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