Exact measures of income in a hyperbolic economy
For a closed economy with human-made capital, non-renewable resource depletion and (possibly) exogenous, hyperbolic technical progress as explicit-form inputs to a production function, there is a feasible development path that is as if optimal with respect to hyperbolic utility discounting. On this path, typically, welfare-equivalent income wealth-equivalent income Sefton-Weale income net national product, with possibly dramatic differences among these measures; and sustainable income can be greater than, equal to, or less than NNP. For low enough discounting, growing consumption is optimal even when technical progress is zero. A particular discount rate makes all income measures and consumption constant and (except net national product) equal; and zero technical progress then gives the Solow (1974) maximin as a special case. The optimal path is time-consistent because of the way the utility discount rate is chosen to depend on the economy s stocks, and hence on absolute time.
Volume (Year): 9 (2004)
Issue (Month): 04 (August)
|Contact details of provider:|| Postal: |
Web page: http://journals.cambridge.org/jid_EDE
References listed on IDEAS
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.:
- Vincent, Jeffrey R., 2000. "Green accounting: from theory to practice," Environment and Development Economics, Cambridge University Press, vol. 5(01), pages 13-24, February.
- Martin L. Weitzman, 2001.
American Economic Review,
American Economic Association, vol. 91(1), pages 260-271, March.
- Martin L. Weitzman, 1998. "Gamma Discounting," Harvard Institute of Economic Research Working Papers 1843, Harvard - Institute of Economic Research.
- Usher, Dan, 1994. "Income and the Hamiltonian," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(2), pages 123-41, June.
- Asheim, Geir B., 2000.
"Green national accounting: why and how?,"
Environment and Development Economics,
Cambridge University Press, vol. 5(01), pages 25-48, February.
- Heal, Geoffrey M., 1993.
"The optimal use of exhaustible resources,"
Handbook of Natural Resource and Energy Economics,
in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880
- Pezzey, John C V & Withagen, Cees A, 1998. " The Rise, Fall and Sustainability of Capital-Resource Economies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(2), pages 513-27, June.
- John Hartwick, 1976.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
220, Queen's University, Department of Economics.
- 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.
- 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.
- R. M. Solow, 1973. "Intergenerational Equity and Exhaustable Resources," Working papers 103, Massachusetts Institute of Technology (MIT), Department of Economics.
- William D. Nordhaus, 2000. "New Directions in National Economic Accounting," American Economic Review, American Economic Association, vol. 90(2), pages 259-263, May.
- Laibson, David, 1997.
"Golden Eggs and Hyperbolic Discounting,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(2), pages 443-77, May.
- Weitzman, Martin L, 1997. " Sustainability and Technical Progress," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 1-13, March.
- Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation for Research in Economics, Yale University.
- Norman Henderson & Ian Bateman, 1995. "Empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(4), pages 413-423, June.
- Sefton, J. A. & Weale, M. R., 1996. "The net national product and exhaustible resources: The effects of foreign trade," Journal of Public Economics, Elsevier, vol. 61(1), pages 21-47, July.
- Asheim, Geir B, 1997. " Adjusting Green NNP to Measure Sustainability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(3), pages 355-70, September.
When requesting a correction, please mention this item's handle: RePEc:cup:endeec:v:9:y:2004:i:04:p:473-484_00. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.