Empirical Testing of Genuine Savings as an Indicator of Weak Sustainability: A Three-Country Analysis of Long-Run Trends

Nick Hanley*, Les Oxley, David Greasley, Eoin McLaughlin, Matthias Blum

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

Genuine Savings has emerged as a widely-used indicator of sustainable development. This approach to conceptualising what sustainability is about has strong links to work published by Anil Markandya and colleagues over 20 years ago. 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.

Original languageEnglish
Pages (from-to)313-338
Number of pages26
JournalEnvironmental and Resource Economics
Volume63
Issue number2
DOIs
Publication statusPublished - Feb 2016

Keywords

  • Cointegration
  • Comprehensive investment
  • Economic history
  • Genuine savings
  • Sustainable development indicators
  • Weak sustainability

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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