On the Generalized Weitzman's Rule
AbstractWeitzman (1976) provides a foundation for net national product of a competitive economy as the annuity equivalent of the present discounted value of maximized consumption. This paper considers how Weitzman's rule should be modified if the competitive equilibrium is affected by the presence of market distortions. The paper first examines the model with external effects of capital in which there are spillovers of knowledge. The paper also studies the model with policy interventions where the policy maker seeks the second best allocation. The central concern of the paper is to elucidate the factors that generate a divergence between net national product and the welfare equivalence of maximized consumption. In discussing each model, the paper presents a typical example that has been widely discussed in the literature.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16996.
Date of creation: Mar 2004
Date of revision:
Weitzman's rule; net national product; externalities; policy distortions;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
- Hulten, Charles R, 1992. " Accounting for the Wealth of Nations: The Net versus Gross Output Controversy and Its Ramifications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S9-24, Supplemen.
- Hartwick, John M, 1994. " National Wealth and Net National Product," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 253-56.
- Kehoe, Timothy J & Levine, David K & Romer, Paul M, 1992.
"On Characterizing Equilibria of Economies with Externalities and Taxes as Solutions to Optimization Problems,"
Springer, vol. 2(1), pages 43-68, January.
- Timothy J. Kehoe & David K. Levine & Paul M. Romer, 1990. "On characterizing equilibria of economies with externalities and taxes as solutions to optimization problems," Working Papers 436, Federal Reserve Bank of Minneapolis.
- Pemberton, Malcolm & Ulph, David, 2001. " Measuring Income and Measuring Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 25-40, March.
- Mino, Kazuo, 2001. "On Time Consistency in Stackelberg Differential Games," MPRA Paper 17028, University Library of Munich, Germany.
- Susanto Basu & John G. Fernald, 1996.
"Returns to scale in U.S. production: estimates and implications,"
International Finance Discussion Papers
546, Board of Governors of the Federal Reserve System (U.S.).
- Basu, Susanto & Fernald, John G, 1997. "Returns to Scale in U.S. Production: Estimates and Implications," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 249-83, April.
- Mino, Kazuo, 2001.
"Optimal taxation in dynamic economies with increasing returns,"
Japan and the World Economy,
Elsevier, vol. 13(3), pages 235-253, August.
- Mino, Kazuo, 2000. "Optimal Taxation in Dynamic Economies with Increasing Returns," MPRA Paper 17324, University Library of Munich, Germany.
- Sato, Ryuzo, 1985. "The invariance principle and income-wealth conservation laws : Application of Lie groups and related transformations," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 365-389.
- Kevin J. Lansing, 1998.
"Optimal redistributive capital taxation in a neoclassical growth model,"
Working Papers in Applied Economic Theory
99-01, Federal Reserve Bank of San Francisco.
- Lansing, Kevin J., 1999. "Optimal redistributive capital taxation in a neoclassical growth model," Journal of Public Economics, Elsevier, vol. 73(3), pages 423-453, September.
- Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-65.
- M. L. Weitzman, 1974.
"On the Welfare Significance of National Product in Dynamic Economy,"
125, Massachusetts Institute of Technology (MIT), Department of Economics.
- Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February.
- Pezzey, John C. V., 2003.
"Measuring technical progress in gross and net products,"
Elsevier, vol. 78(2), pages 247-252, February.
- John C. V. Pezzey, 2002. "Measuring Technical Progress in Gross and Net Products," Economics and Environment Network Working Papers 0202, Australian National University, Economics and Environment Network.
- Sato, Ryuzo & Kim, Youngduk, 2002. "Hartwick's rule and economic conservation laws," Journal of Economic Dynamics and Control, Elsevier, vol. 26(3), pages 437-449, March.
- Thomas Aronsson & Karl-Gustaf Löfgren, 1995. "National product related welfare measures in the presence of technological change: Externalities and uncertainty," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(4), pages 321-332, June.
- Dixit, Avinash & Hammond, Peter & Hoel, Michael, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," Review of Economic Studies, Wiley Blackwell, vol. 47(3), pages 551-56, April.
- Aronsson, Thomas & Lofgren, Karl-Gustaf, 1996. " Social Accounting and Welfare Measurement in a Growth Model with Human Capital," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 185-201, June.
- Geir B. Asheim, 2002.
"Green National Accounting for Welfare and Sustainability: A Taxonomy of Assumptions and Results,"
CESifo Working Paper Series
827, CESifo Group Munich.
- 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, 05.
- Asheim, Geir, 2003. "Green national accounting for welfare and sustainability: A taxonomy of assumptions and results," Memorandum 31/2002, Oslo University, Department of Economics.
- Weitzman, Martin L, 1997. " Sustainability and Technical Progress," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 1-13, March.
- Asheim, Geir B, 1997. " Adjusting Green NNP to Measure Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 355-70, September.
- Hartwick, John M, 1977.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
American Economic Review,
American Economic Association, vol. 67(5), pages 972-74, December.
- John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
- Hartwick, John M & Long, Ngo Van, 1999.
"Constant Consumption and the Economic Depreciation of Natural Capital: The Nonautonomous Case,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 53-62, February.
- John M. Hartwick & Ngo Van Long, 1996. "Constant Consumption and the Economic Depreciation of Natural Capital : The Non Autonomous Case," CIRANO Working Papers 96s-09, CIRANO.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.