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Testing genuine saving

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  • Hamilton, Kirk
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    Abstract

    The World Bank has been publishing estimates of adjusted net or"genuine"saving since 1999. This measure of saving treats depletion of natural resources as a type of economic depreciation. Hamilton uses recent theoretical results relating growth in saving to growth in future consumption to provide a test of genuine saving using historical data. Did measured genuine saving in 1976, for example,"predict"the observed changes in consumption over subsequent decades? The author tests four alternative measures of saving econometrically. The worst measure, in terms of explained variation, is traditional net saving. Genuine saving adjusted to reflect population growth exhibits the worst fit with theory. Both gross saving and genuine saving perform better, with good concordance with theory, while genuine saving exhibits a moderate advantage in terms of goodness of fit.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3577.

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    Date of creation: 01 Apr 2005
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    Handle: RePEc:wbk:wbrwps:3577

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    Related research

    Keywords: Economic Investment&Savings; Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Contractual Savings;

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    1. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-56, May.
    2. Asheim,G.B. & Weitzman,M.L., 2001. "Does NNP growth indicate welfare improvement?," Memorandum 02/2001, Oslo University, Department of Economics.
    3. 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.
    4. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
    5. Kirk Hamilton & John Hartwick, 2005. "Investing exhaustible resource rents and the path of consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 615-621, May.
    6. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
    7. Ferreira, Susana & Vincent, Jeffrey R, 2005. "Genuine Savings: Leading Indicator of Sustainable Development?," Economic Development and Cultural Change, University of Chicago Press, vol. 53(3), pages 737-54, April.
    8. World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921, October.
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    Citations

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    1. > Environmental and Natural Resource Economics > Environmental Economics > Environmental accounting
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    Cited by:
    1. Frank Convery, 2007. "Making a difference — how environmental economists can influence the policy process — a case study of David W Pearce," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 7-32, May.
    2. Ollivier, TO, 2009. "The usefulness of aggregate sustainability indicators for policy making: What do they say for Madagascar?," MPRA Paper 16607, University Library of Munich, Germany.
    3. Gnègnè, Yacouba, 2009. "Adjusted net saving and welfare change," Ecological Economics, Elsevier, vol. 68(4), pages 1127-1139, February.

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