Absorbing set
Template:Distinguish Hotelling's rule states that the most socially and economically profitable extraction path of a non-renewable resource is one along which the price of the resource, determined by the marginal net revenue from the sale of the resource, increases at the rate of interest. It describes the time path of natural resource extraction which maximizes the value of the resource stock.[1]
The rule is derived from a 1931 paper by U.S. economist Harold Hotelling,[2] which has laid the foundation for further research in the field of non-renewable resource economics.[1]
History
During the late nineteenth and early twentieth century, conservation in the United States was significantly visible. This conservation movement was concerned about the possible overexploitation of non-renewable natural resources and called for regulation. Harold Hotelling responded to this call with his paper. In fact, he began his paper with an introduction to this problem by stating in 1931 that:[1][3]
- “Contemplation of the world’s disappearing supplies of minerals, forests, and other exhaustible assets had led to demands for regulation of their exploitation. The feeling that these products are now too cheap for the good of future generations, that they are being selfishly exploited at too rapid a rate, and that in consequence of their excessive cheapness they are being produced and consumed wastefully has given rise to the conservation movement.”
Before the 1970s, serious attention was not given to Hotelling’s views regarding economics of exhaustible resources. This was because when Hotelling came up with this hypothesis, the media’s emphasis was towards issues like the Great Depression and World War II.Template:Fact
After World War II, there were concerns about the sufficiency and adequacy of natural resources, especially in the United States. This led to the establishment of the President’s Materials Policy Commission, called the Paley commission, the report of which was published in 1952. It was an outcome of the Resources of the Future, a part of the Washington think tank. However this did not help in any way in recognizing Hotelling’s work. In 1963, Harold Barnett and Chandler Morse published their paper "Scarcity and Growth", which was one of the first of its kind in analysing the long-run measures of scarcity of a number of natural resources in a systematic fashion. A passing reference to Hotelling’s paper was made in that paper. This leads to the conclusion that a lack of attention and interest to Hotelling’s work cannot be attributed to the lack of public concern for the issues relating natural resources before 1970s as there is no sufficient evidence to prove this point.
Hotelling’s paper was difficult and given the level of sophistication in economic profession concerning mathematics at that time, it might have been a reason why his contribution went unnoticed. In fact Hotelling himself stated that the Economic Journal had rejected his paper due to high difficulty level of mathematics involved in it.
The publication by Dennis Meadows et al. The Limits to Growth in 1972 set off another period of intense public concern for natural resources.Template:Fact According to the publication, unless economic growth was cut back, there would be disastrous consequences on the level of natural resources. This made Hotelling rule, which consisted of optimal control theory, seek attention from the academic economists. In 1973 “The Allocation of Energy Resources" was published by William Nordhaus. It sought to solve the problem of usage of different energy resources by applying the Hotelling model. Nordhaus also published in the next year a critical analysis of The Limits to Growth in American Economic Review. The subject of natural resource economics got further contribution from Robert Solow, who committed his 1974 Ely Lecture to the American Economic Association. In the same year, Partha Dasgupta, Geoffrey Heal, Tjalling Koopmans, Joseph Stiglitz, and Robert Solow contributed to the topic of exhaustible resources which was published by Review of Economic Studies. All these events provided greater weight and prominence to natural resource economics as a field of research. Hotelling’s rule acquired the centre stage and still continues to maintain its position.[1]
The Rule
As mentioned earlier, and in Jeffrey A. Krautkraemer’s words, “Hotelling’s formal analysis of nonrenewable resource depletion generates some basic implications for how the finite availability of a nonrenewable resource affects the resource price and extraction paths.”[3]
Hotelling’s rule primarily addresses one basic question of the owner or agent involved in the exploitation of the non-renewable resource: How much of the asset should I consume now and how much should I store for the future? In other words, the agent has to choose between the current value of the asset if extracted and sold and the future increased value of the asset if left unexploited. This simple rule can be expressed by the equilibrium situation representing the optimal solution.
when P(t) is the unit profit at time t and δ is the discount rate (the inverse of rate of return).
The stock of a non-renewable resource, being an asset, holds a market value which yields returns to its owner at a certain rate. This rate of return can be determined by three components:
- Flow of product generated by the marginal unit of the resource, Marginal Productivity or Dividend rate.
- Change in the physical characteristics of the asset over time.
- The rate at which market value of the asset will change over time.
The equality of this rate of return to the rate of return of alternative investments (i.e., if the yield obtained from asset’s sale is invested elsewhere) determines the asset market’s equilibrium. Considering a nonrenewable resource, say a stock of oil in the ground, which is subject to two characteristics; one, it has a fixed size which cannot be increased over time and two, the in-situ asset is unproductive. This makes the first component, marginal productivity, nil. Assuming that holding the asset in-situ will not lead to its depreciation, even the second component is rendered zero. Remainder is the rate of appreciation of the asset’s value which is hence, the only determinant of rate of return of the stock of oil.[1]
Framework
The value of the marginal unit of the natural resource held in-situ less the cost of taking it out of the ground is what its value of the resource would be in the flow market. If p(t) is the price which the extracted resource can fetch on the market and c(t) is the marginal cost of extracting it at date t, then its marginal value must be:
Π(t) = p(t) − c(t), which represents the asset price of the resource. . Denoting the rate of interest by r, then asset markets equilibrium is established when
Π'(t)/ Π(t)= r
This is the famous Hotelling’s rule which states the asset market equilibrium condition. It states that the net price of the natural resource must grow at the rate of interest.
Assuming that the marginal cost of extracting the resource does not depend on the rate of extraction and does not vary over time, then the market price of the asset over time would be
If this was the case then the rate of growth of the observed price of non-renewable resource would be inclined towards the rate of interest as the proportion of costs in price gets smaller and the rent brought about by the scarcity of the natural resource gets higher.
But this is not in line with the statistics observed over more than a century. Statistics concerning U.S. price data for the period 1870–2004 for copper, lead, zinc, coal, and petroleum, 1880–2004 for tin, 1900–2004 for aluminium and nickel and 1920-2004 for natural gas, reveal the rate of change of prices of these resources being influenced by a high degree of volatility. But the more important phenomenon is that the volatility seemed to be centered at 0. In fact the mean rate of change of price in none of the ten cases is considerably different from 0. Thus the actual price of the resources does not seem to be following a particular trend and definitely not the path of the positive trend as recommended by Hotelling’s rule.[1]
Drawback
While the rule predicts exponentially increasing resource prices, the results of the empirical studies are not in tandem with the rule. The results so far showed either declining or constant resource prices over time. In response to this contrast, many economists and researchers tried to bridge this gap by plugging in more variables to see their influence on resource price. Alternatively, some authors tried using different econometric techniques to generate rising data on resource prices.[4]
References
43 year old Petroleum Engineer Harry from Deep River, usually spends time with hobbies and interests like renting movies, property developers in singapore new condominium and vehicle racing. Constantly enjoys going to destinations like Camino Real de Tierra Adentro.
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting
In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang
Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules
Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.
A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running
The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more
There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang - ↑ One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting
In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang
Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules
Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.
A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running
The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more
There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang - ↑ 3.0 3.1 One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting
In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang
Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules
Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.
A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running
The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more
There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang - ↑ 20 year-old Real Estate Agent Rusty from Saint-Paul, has hobbies and interests which includes monopoly, property developers in singapore and poker. Will soon undertake a contiki trip that may include going to the Lower Valley of the Omo.
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