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Accounting for unexpected capital gains on natural assets in Net National Product


  • Robert J. Hill


Failure to separate unexpected capital gains and losses on natural assets from depletion breaks the link between Net National Product (NNP) and sustainability. For resource rich countries this can lead to large spurious fluctuations in NNP, making it virtually useless for policy purposes. In contrast, when depletion is measured correctly, the link between NNP and sustainability is restored and there is no reason to expect NNP to be any more volatile than GNP. Oil data for Great Britain and Indonesia are used to illustrate the very significant impact that the treatment of capital gains and depletion can have on NNP. Copyright Springer-Verlag 2004

Suggested Citation

  • Robert J. Hill, 2004. "Accounting for unexpected capital gains on natural assets in Net National Product," Empirical Economics, Springer, vol. 29(4), pages 803-824, December.
  • Handle: RePEc:spr:empeco:v:29:y:2004:i:4:p:803-824
    DOI: 10.1007/s00181-004-0215-7

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    Cited by:

    1. Cairns, Robert D., 2018. "Economic Accounting in the Simple Hotelling Model," Resource and Energy Economics, Elsevier, vol. 51(C), pages 18-27.

    More about this item


    Capital gains; depletion; net national product; environmental accounting; sustainability; O47; P44; Q32;
    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
    • P44 - Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development


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