Effects of Exhaustible Resources and Declining Population on Economic Growth with Hotelling's Rule

This study investigates the impact of population decline on the long-term economic growth in an economy with exhaustible resources. Analyzing a growth model that incorporates exhaustible resources and Hotelling’s rule, we obtain two main results. First, the economy converges to a steady state, irrespective of whether the population growth rate is positive or negative. Second, despite population decline, the long-run growth rate of per capita output can be positive if the population growth rate is less than a certain negative threshold value.