Genuine savings with adjustment costs

Yamaguchi, Rintaro and Sato, Masayuki and Ueta, Kazuhiro (2009): Genuine savings with adjustment costs.

Abstract

In this paper, we consider how genuine savings would be altered if the adjustment costs of capitals are taken into account in the stylized capitalresource model. It is shown that, in order to derive the modified genuine savings, through shadow prices, the original genuine savings have to be divided by the marginal adjustment costs of the capital in question. This implies that economies with volatile savings harbor hidden costs even if they are judged as sustainable by conventional genuine savings indicators.

• Item Type: MPRA Paper
• Language: English
• Keywords: genuine savings; adjustment costs; sustainable development; natural capital
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth

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