Optimal growth, genuine savings and long-run dynamics

Valente, Simone (2008) Optimal growth, genuine savings and long-run dynamics. Scottish Journal of Political Economy, 55 (2). pp. 210-226. ISSN 0036-9292

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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 that sustainability be rejected. However, this criterion cannot ascertain sustainability, because 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 long-run genuine savings and the limiting condition for sustained utility in the capital-resource growth model, assuming technical progress and resource renewability. This result suggests to extend the genuine saving method to include a test of the limiting condition: if this condition is empirically rejected, positive current genuine savings are delivering a false message.

Item Type:	Article
Uncontrolled Keywords:	genuine saving,optimal growth,net investments,sustainability,technological progress
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Economic Theory
Depositing User:	Pure Connector
Date Deposited:	24 Sep 2016 00:57
Last Modified:	07 Mar 2024 02:04
URI:	https://ueaeprints.uea.ac.uk/id/eprint/60322
DOI:	10.1111/j.1467-9485.2008.00451.x

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