Abstract for: An Enhancement for the Textbook’s Models of Natural Resources and Economic Growth

The state variables of the original theoretical law of capital accumulation are relative labour compensation, employment ratio, gross unit resource rent, produced capital-output ratio, proved non-renewable reserves-output ratio, desired proved non-renewable reserves-output ratio, and depletion of proved non-renewable reserves per unit of net output. This theoretical law is a subject of multiple tests. Taking it as a starting point this paper establishes that the basic “neoclassical” ecological-economic models in the Professor D. Romer textbook can be refined and generalized. Their premises on infinite growth of output-natural resources ratio and on reducing unit resources depletion almost to zero even along with declining net output are not practically feasible. The long-term environmental policies recommended by this textbook could be damaging or inefficient. The proposed deep alterations of the basic “neoclassical” models shed light on balanced and aggravated regimes of capital accumulation. The advantages of system dynamics approach over single equation technique are vividly revealed with clear implications for environmental policy as well as for higher education. JEL classification: A2; B16; C6; E10; E27; N5; Q32 Keywords: capital accumulation, material interests, Hotelling rule, proved non-renewable reserves, absolute and differential rent, fragile sustainable development, endemic disequilibrium, mode with aggravation, social closed-loop control