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Investment Decisions, Future Consumption and Sustainability under Optimal Growth

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  • Aronsson, Thomas
  • Johansson, Per-Olov

    (Dept. of Economics, Stockholm School of Economics)

  • Löfgren, Karl-Gustaf

Abstract

In this paper we derive an exact relationship between the net investment at a given point in time and future consumption plans. Our result is general in the sense that it neither requires a constant rate of time preference nor an exponential discount function. One interpretation of the result is in terms of the willingness to pay for net investments, while another interpretation relates to conditions for sustainability.

Suggested Citation

  • Aronsson, Thomas & Johansson, Per-Olov & Löfgren, Karl-Gustaf, 1995. "Investment Decisions, Future Consumption and Sustainability under Optimal Growth," SSE/EFI Working Paper Series in Economics and Finance 49, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0049
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    References listed on IDEAS

    as
    1. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    2. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-265.
    3. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 90(1), pages 156-162.
    4. Hartwick, John M., 1990. "Natural resources, national accounting and economic depreciation," Journal of Public Economics, Elsevier, vol. 43(3), pages 291-304, December.
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    Cited by:

    1. Withagen, Cees & B. Asheim, Geir, 1998. "Characterizing sustainability: The converse of Hartwick's rule," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 159-165, September.
    2. Mitra, Tapan, 2002. "Intertemporal Equity and Efficient Allocation of Resources," Journal of Economic Theory, Elsevier, vol. 107(2), pages 356-376, December.

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    More about this item

    Keywords

    Ramesy model; welfare measurement; national product;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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