IDEAS home Printed from https://ideas.repec.org/a/spr/lsprsc/v5y2012i3p167-174.html
   My bibliography  Save this article

Genuine saving under stochastic growth

Author

Listed:
  • Chuan-Zhong Li
  • Karl-Gustaf Löfgren

Abstract

The concept of genuine saving has in recent years become widely accepted as a dynamic welfare indicator, which first appeared in Weitzman (Q. J. Econ. 99:1–13, 1976 ) and then formalized by Pearce and Atkinson (Ecol. Econ. 8:103–108, 1993 ). This paper attempts to generalize this concept in a stochastic setting using an extended version of the standard Ramsey growth model (Merton in Rev. Econ. Stud. 42:375–379, 1975 ). We find that the genuine saving formula in a stochastic setting also involves a variance component reflecting the welfare loss from risk aversion. Copyright Springer-Verlag 2012

Suggested Citation

  • Chuan-Zhong Li & Karl-Gustaf Löfgren, 2012. "Genuine saving under stochastic growth," Letters in Spatial and Resource Sciences, Springer, vol. 5(3), pages 167-174, October.
    • Handle: RePEc:spr:lsprsc:v:5:y:2012:i:3:p:167-174
    DOI: 10.1007/s12076-012-0080-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s12076-012-0080-5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s12076-012-0080-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," The World Bank Economic Review, World Bank, vol. 13(2), pages 333-356, May.
    2. Kenneth J. Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "The genuine savings criterion and the value of population," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 217-225, March.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    5. Turnovsky, Stephen J. & Smith, William T., 2006. "Equilibrium consumption and precautionary savings in a stochastically growing economy," Journal of Economic Dynamics and Control, Elsevier, vol. 30(2), pages 243-278, February.
    6. Pearce, David W. & Atkinson, Giles D., 1993. "Capital theory and the measurement of sustainable development: an indicator of "weak" sustainability," Ecological Economics, Elsevier, vol. 8(2), pages 103-108, October.
    7. Giles Atkinson & Kirk Hamilton, 2007. "Progress along the path: evolving issues in the measurement of genuine saving," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 43-61, May.
    8. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(1), pages 156-162.
    9. repec:reg:rpubli:132 is not listed on IDEAS
    10. Robert C. Merton, 1975. "An Asymptotic Theory of Growth Under Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(3), pages 375-393.
    11. Heal, Geoffrey & Kristrom, Bengt, 2005. "National income and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 22, pages 1147-1217, Elsevier.
    12. Hayne E. Leland, 1968. "Saving and Uncertainty: The Precautionary Demand for Saving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 465-473.
    13. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-265.
    14. Thomas Aronsson & Karl-Gustaf Löfgren, 1995. "National product related welfare measures in the presence of technological change: Externalities and uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(4), pages 321-332, June.
    15. Hamilton, Kirk, 1994. "Green adjustments to GDP," Resources Policy, Elsevier, vol. 20(3), pages 155-168, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "Genuine Saving and Conspicuous Consumption," Working Papers in Economics 605, University of Gothenburg, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nick Hanley & Louis Dupuy & Eoin McLaughlin, 2015. "Genuine Savings And Sustainability," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 779-806, September.
    2. McGrath, Luke & Hynes, Stephen & McHale, John, 2019. "Augmenting the World Bank's estimates: Ireland's genuine savings through boom and bust," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    3. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2009. "Genuine Saving under Stochastic Growth," Umeå Economic Studies 779, Umeå University, Department of Economics.
    4. Luke McGrath & Stephen Hynes & John McHale, 2022. "The Air we Breathe: Estimates of Air Pollution Extended Genuine Savings for Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 161-188, March.
    5. Ferreira, Susana & Moro, Mirko, 2010. "Constructing Genuine Savings Indicators for Ireland, 1995-2005," Stirling Economics Discussion Papers 2010-10, University of Stirling, Division of Economics.
    6. Pezzey, J.C.V.John C. V., 2004. "One-sided sustainability tests with amenities, and changes in technology, trade and population," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 613-631, July.
    7. Ollivier, Timothée & Giraud, Pierre-Noël, 2011. "Assessing sustainability, a comprehensive wealth accounting prospect: An application to Mozambique," Ecological Economics, Elsevier, vol. 70(3), pages 503-512, January.
    8. Adrian Boos, 2015. "Genuine Savings as an Indicator for “Weak” Sustainability: Critical Survey and Possible Ways forward in Practical Measuring," Sustainability, MDPI, vol. 7(4), pages 1-37, April.
    9. Gren, Ing-Marie & Isacs, Lina, 2009. "Ecosystem services and regional development: An application to Sweden," Ecological Economics, Elsevier, vol. 68(10), pages 2549-2559, August.
    10. Lucas Bretschger & Simone Valente, 2011. "International trade and net investment: theory and evidence," International Economics and Economic Policy, Springer, vol. 8(2), pages 197-224, June.
    11. Philip Lawn, 2007. "A Stock-Take of Green National Accounting Initiatives," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 80(2), pages 427-460, January.
    12. John C. V. Pezzey, 2002. "One-sided Unsustainability Tests and NNP Measurement with Multiple Consumption Goods," Economics and Environment Network Working Papers 0208, Australian National University, Economics and Environment Network.
    13. Samakovlis, Eva, 2008. "How are Green National Accounts Produced in Practice?," Working Papers 105, National Institute of Economic Research.
    14. Vouvaki, Dimitra & Xepapadeas, Anastasios, 2008. "Changes in social welfare and sustainability: Theoretical issues and empirical evidence," Ecological Economics, Elsevier, vol. 67(3), pages 473-484, October.
    15. Kirk Hamilton, 2003. "Sustaining Economic Welfare: Estimating Changes in Total and Per Capita Wealth," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 5(3), pages 419-436, September.
    16. Edward B. Barbier, 2017. "Natural Capital and Wealth in the 21st Century," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(3), pages 391-405, June.
    17. Dietz, Simon & Neumayer, Eric, 2007. "Weak and strong sustainability in the SEEA: Concepts and measurement," Ecological Economics, Elsevier, vol. 61(4), pages 617-626, March.
    18. Charles R. Hulten & Paul Schreyer, 2010. "GDP, Technical Change, and the Measurement of Net Income: the Weitzman Model Revisited," NBER Working Papers 16010, National Bureau of Economic Research, Inc.
    19. Geir B. Asheim, 2003. "Green national accounting for welfare and sustainability:A Taxonomy Of Assumptions And Results," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 113-130, May.
    20. Aronsson, Thomas & Cialani, Catia & Löfgren, Karl-Gustaf, 2012. "Genuine saving and the social cost of taxation," Journal of Public Economics, Elsevier, vol. 96(1), pages 211-217.

    More about this item

    Keywords

    Genuine saving; Stochastic growth; Welfare measurement; D6; O40;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:lsprsc:v:5:y:2012:i:3:p:167-174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.