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, Paul Warde

Research output: Working paper

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.
Original languageEnglish
PublisherUniversity of Stirling
Number of pages35
Publication statusPublished - Apr 2014

Publication series

NameStirling Economics Discussion Paper

Keywords

  • Weak sustainability; Genuine Savings; comprehensive investment; economic history; indicators; cointegration

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