University Geir B. Asheim — Articles


Adjusting Green NNP to measure sustainability

This is an electronic version (in pdf format, 80 KB) of an article published in Scandinavian Journal of Economics. Complete citation information for the final version of the paper, as published in the print edition of Scandinavian Journal of Economics , is available on the Blackwell Synergy online delivery service, accessible via the journalís website at http://www.blackwellpublishing.com/journal.asp?ref=0347-0520 or http://www.blackwell-synergy.com.

Abstract:
Weitzman provides a foundation for NNP as the stationary equivalent of a wealth-maximizing path when there is a constant interest rate and no exogenous technological progress. Here the implications of Weitzman's foundation are explored in a case encountered in resource models, i.e., the case of non-constant interest rates. In a setting that allows for exogenous technological progress, an expression for NNP is obtained that adjusts Green NNP for anticipated capital gains and interest rate effects to produce a measure that indicates sustainability. This result is important when measuring the relative sustainability of resource rich and resource poor countries.