Empirical testing of genuine savings as an indicator of weak sustainability: a three-country analysis of long run trends

Les Oxley, Nick Hanley, David Greasley, Matthias Blum, Eoin McLaughlin, Jan Kunnas and Paul Warde

No 2014-007, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: Genuine Savings has emerged as a widely-used indicator of sustainable development. In this paper, we use long-term data stretching back to 1870 to undertake empirical tests of the relationship between Genuine Savings (GS) and future well-being for three countries: Britain, the USA and Germany. Our tests are based on an underlying theoretical relationship between GS and changes in the present value of future consumption. Based on both single country and panel results, we find evidence supporting the existence of a cointegrating (long run equilibrium) relationship between GS and future well-being, and fail to reject the basic theoretical result on the relationship between these two macroeconomic variables. This provides some support for the GS measure of weak sustainability. We also show the effects of modelling shocks, such as World War Two and the Great Depression.

Keywords: Weak sustainability; Genuine Savings; comprehensive investment; economic history; indicators; cointegration (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-his
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Related works:
Journal Article: Empirical Testing of Genuine Savings as an Indicator of Weak Sustainability: A Three-Country Analysis of Long-Run Trends (2016)
Working Paper: Empirical testing of genuine savings as an indicator of weak sustainability: a three-country analysis of long run trends (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:551

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