IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpot/0505009.html
   My bibliography  Save this paper

Genuine Dissaving and Optimal Growth

Author

Listed:
  • Simone Valente

    (ETH Zurich - Institute of Economic Research)

Abstract

Green accounting theories have shown that negative genuine savings at some point in time imply unsustainability. Consequently, recent studies advocate the use of the genuine savings measure for empirical testing: a negative index implies sustainability be rejected. This criterion is not forward-looking: positive current genuine savings do not rule out ’genuine dissaving’ in the future. This paper derives a one-to-one relationship between the sign of longrun genuine savings and the limiting sustainability condition in the capital-resource model: if the sum of the rates of resource regeneration and augmentation exceeds (falls short of) the discount rate, long-run genuine savings are positive (negative). Testing this limiting condition allows to reveal whether current genuine savings are delivering a false message.

Suggested Citation

  • Simone Valente, 2005. "Genuine Dissaving and Optimal Growth," Others 0505009, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0505009
    Note: Type of Document - pdf; pages: 17
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/othr/papers/0505/0505009.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lucas Bretschger & Thomas M. Steger, 2004. "The dynamics of economic integration: Theory and policy," International Economics and Economic Policy, Springer, vol. 1(2), pages 119-134, January.
    2. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 551-556.
    3. 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.
    4. Bretschger, L. & Smulders, J.A., 2003. "Sustainability and Substitution of Exhaustible Natural Resources : How Resource Prices Affect Long-Term R&D Investments," Other publications TiSEM 2ae844f6-5ea5-45d4-963d-1, Tilburg University, School of Economics and Management.
    5. Simone Valente, 2005. "Sustainable Development, Renewable Resources and Technological Progress," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(1), pages 115-125, January.
    6. Thomas M. Steger, 2003. "Economic Growth and Sectoral Change under Resource Reallocation Costs," CER-ETH Economics working paper series 03/30, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Trimborn, Timo & Koch, Karl-Josef & Steger, Thomas M., 2008. "Multidimensional Transitional Dynamics: A Simple Numerical Procedure," Macroeconomic Dynamics, Cambridge University Press, vol. 12(3), pages 301-319, June.
    8. Thomas M. Steger, 2006. "On the Mechanics of Economic Convergence," German Economic Review, Verein für Socialpolitik, vol. 7(3), pages 317-337, August.
    9. Vellinga, Nico & Withagen, Cees, 1996. "On the Concept of Green National Income," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 499-514, October.
    10. Asheim, Geir B. & Weitzman, Martin L., 2001. "Does NNP growth indicate welfare improvement?," Economics Letters, Elsevier, vol. 73(2), pages 233-239, November.
    11. 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.
    12. Eric Neumayer, 2013. "Weak versus Strong Sustainability," Books, Edward Elgar Publishing, number 14993.
    13. Karen Pittel & Amigues Jean-Pierre & Thomas Kuhn, 2005. "Endogenous growth and recycling : a material balance approach," CER-ETH Economics working paper series 05/37, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    14. Pearce, David & Hamilton, Kirk & Atkinson, Giles, 1996. "Measuring sustainable development: progress on indicators," Environment and Development Economics, Cambridge University Press, vol. 1(1), pages 85-101, February.
    15. 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.
    16. Asheim, Geir B, 1994. " Net National Product as an Indicator of Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(2), pages 257-265.
    17. Karen Pittel & Dirk T.G. Rübbelke, 2006. "Private provision of public goods: incentives for donations," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 33(6), pages 497-519, November.
    18. Hamilton, Kirk, 2000. "Sustaining economic welfare : estimating changes in per capita wealth," Policy Research Working Paper Series 2498, The World Bank.
    19. Joseph Stiglitz, 1974. "Growth with Exhaustible Natural Resources: Efficient and Optimal Growth Paths," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 123-137.
    20. John Hartwick & Ngo Van Long & Huilan Tian, 2003. "On the Peaking of Consumption with Exhaustible Resources and Zero Net Investment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(3), pages 235-244, March.
    21. Partha Dasgupta & Geoffrey Heal, 1974. "The Optimal Depletion of Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 3-28.
    22. 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.
    Full references (including those not matched with items on IDEAS)

    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. Di Maria, Corrado & Valente, Simone, 2006. "The Direction of Technical Change in Capital-Resource Economies," MPRA Paper 1040, University Library of Munich, Germany.
    3. 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.
    4. Valente, Simone, 2008. "Intergenerational transfers, lifetime welfare, and resource preservation," Environment and Development Economics, Cambridge University Press, vol. 13(1), pages 53-78, February.
    5. 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.
    6. 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.
    7. Bazhanov, A., 2011. "The Dependence of the Potential Sustainability of a Resource Economy on the Initial State: a Comparison of Models Using the Example of Russian Oil Extraction," Journal of the New Economic Association, New Economic Association, issue 12, pages 77-100.
    8. Luke McGrath & Stephen Hynes & John McHale, 2020. "Linking Sustainable Development Assessment in Ireland and the European Union with Economic Theory," The Economic and Social Review, Economic and Social Studies, vol. 51(2), pages 327-355.
    9. 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.
    10. Louis Dupuy, 2012. "International Trade and Sustainability : A survey," Working Papers hal-00701426, HAL.
    11. Bazhanov, Andrei, 2011. "Investment and resource policy under a modified Hotelling rule," MPRA Paper 32428, University Library of Munich, Germany.
    12. 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.
    13. Bazhanov, Andrei, 2011. "Investment and current utility change in dynamically inefficient economies," MPRA Paper 35487, University Library of Munich, Germany.
    14. van der Ploeg, Frederick, 2010. "Why do many resource-rich countries have negative genuine saving?: Anticipation of better times or rapacious rent seeking," Resource and Energy Economics, Elsevier, vol. 32(1), pages 28-44, January.
    15. Koji Tokimatsu & Louis Dupuy & Nick Hanley, 2019. "Using Genuine Savings for Climate Policy Evaluation with an Integrated Assessment Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 281-307, January.
    16. Pezzey, John C.V., 2001. "Optimality, Hartwick’s Rule, and Instruments of Sustainability Policy and Environmental Policy," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125833, Australian Agricultural and Resource Economics Society.
    17. 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.
    18. Geir B. Asheim & Rintaro Yamaguchi, 2023. "Comprehensive National Accounting for Carbon Emissions," CESifo Working Paper Series 10562, CESifo.
    19. Geir B. Asheim & Wolfgang Buchholz, 2004. "A General Approach to Welfare Measurement through National Income Accounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 361-384, June.
    20. John C. V. Pezzey, 2004. "Sustainability Policy and Environmental Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 339-359, June.

    More about this item

    Keywords

    Genuine Saving; Green Accounting; Renewable Resources; Sustainable Development; Technological Progress.;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wpa:wuwpot:0505009. 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: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    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.