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Genuine saving under stochastic growth

Chuan-Zhong Li () and Karl-Gustaf Löfgren ()

Letters in Spatial and Resource Sciences, 2012, vol. 5, issue 3, 167-174

Abstract: The concept of genuine saving has in recent years become widely accepted as a dynamic welfare indicator, which first appeared in Weitzman (Q. J. Econ. 99:1–13, 1976 ) and then formalized by Pearce and Atkinson (Ecol. Econ. 8:103–108, 1993 ). This paper attempts to generalize this concept in a stochastic setting using an extended version of the standard Ramsey growth model (Merton in Rev. Econ. Stud. 42:375–379, 1975 ). We find that the genuine saving formula in a stochastic setting also involves a variance component reflecting the welfare loss from risk aversion. Copyright Springer-Verlag 2012

Keywords: Genuine saving; Stochastic growth; Welfare measurement; D6; O40 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s12076-012-0080-5

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