BACKSTOP TECHNOLOGY AND GROWTH - DOOMSDAY OR STEADY-STATE

A backstop technology provides resources at a constant marginal cost f or an indefinitely long time. Heal's formal model of a backstop techno logy supposed that output is produced by capital and resources. He der ived the result that consumption either grows or decays exponentially, or is constant: the outcome depends on a ''knife-edge'' constellation of exogenous parameters. The result is puzzling because Doomsday coul d arrive despite the availability of a backstop technology. This paper shows that if labor is a productive factor, then a steady-state equil ibrium is reached just as in standard optimal growth models. (C) 1996 Academic Press, Inc.