Genuine dissaving and optimal growth

Simone Valente

No 05/38, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

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 sustainability be rejected. This criterion is not forward-looking: 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 longrun genuine savings and the limiting sustainability condition in the capital-resource model: if the sum of the rates of resource regeneration and augmentation exceeds (falls short of) the discount rate, long-run genuine savings are positive (negative). Testing this limiting condition allows to reveal whether current genuine savings are delivering a false message.

Keywords: Genuine Saving; Green Accounting; Renewable Resources; Sustainable Development; Technological Progress. (search for similar items in EconPapers)
JEL-codes: D90 O47 Q01 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2005-05
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Working Paper: Genuine Dissaving and Optimal Growth (2005)
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