paying down the environmental debt we reflect on scenarios of sustain able development constant utility paths in which the stock of pollution is drawn down by investments in environmental cleanup we also report on con stant utility as interest on the vector of capital stocks in our economy jel 02 the costs of cleaning up the environment involve multiyear programs for many sites and or problems and sums in the billions of dollars we have superfund activities in the united states in mind but obviously the site cleanup problems facing the people of eastern europe are also very large scale cleanup expenditures resemble programs of investment in infrastructure rather than once over disbursements for troubleshoot

sustainability policy and environmental policy a theoretical representative agent economy with a depletable resource stock polluting emissions and productive capital is used to contrast environmental policy which internalises externalised environmental values with sustainability policy which achieves some form of intergenerational equity the obvious environmental policy comprises an emissions tax and a resource stock subsidy each equal to the respective external cost or benefit sustainability policy comprises an incentive affecting the choice between consumption and investment and can be a consumption tax capital subsidy or investment subsidy or a combination thereof environmental policy can reduce the strength of the sustainability policy needed more specialised results are derived in a small open economy with no environmental effects on utility

using genuine savings for climate policy evaluation with an integrated assessment model there has been a recent increase in efforts to develop broader models to assess the impact of climate change and climate change policies both in terms of impact measures beyond gdp and in terms of modelling complexity beyond dice rice models climate policies aimed at reducing co2 emissions can have impacts in multiple sectors of the economy and can change consumption levels over time we show how the sustainability indicator genuine savings can be endogenised within a general equilibrium model and used as a criterion for judging the impacts of such policies in terms of future well being differences in genuine savings rates between co2 emission reduction scenarios are discussed we show how a broader genuine savings based assessment of climate change can result in a re evaluation of the consequences and costs of inaction in terms of various climate change related policies and how multiple environmental and well being outcomes can be analysed within a unified modelling framework

testing genuine savings as a forward looking indicator of future well being over the very long run genuine savings gs have been much used in recent years as an indicator of a country s sustainability according to some theorists e g arrow et al 2012 under certain conditions a country with a positive level of gs should experience non declining future utility given the assumption of unlimited substitutability among all forms of capital sometimes called weak sustainability this paper reports the first very long run tests of gs also called comprehensive investment or adjusted net savings as a forward looking indicator of future well being we assemble data for british capital back to 1765 and construct several net investment measures which are used as indicators of two alternative measures of future well being consumption per capita and real wages an allowance for a value of time due to exogenous technological progress is included in some gs measures and we demonstrate the importance of this measure and the choice of discount rate over the very long run on the whole our results do not reject the postulated relationship between gs and future well being and show gs can be a forward looking indicator of future well being for periods of up to 100 years

long run trends in energy related external costs this paper considers how energy related external costs change through time it focuses on one of the key periods in the history of energy after a period of declining coal prices and soaring consumption which fuelled the second industrial revolution the nineteenth century british economy was externalising the social costs of energy production and consumption on a massive scale rising from 25 in the 1820s an estimated 60 70 of the average social costs of coal were externalised in the 1880s imposing damages close to 20 of gdp the eventual decline in air pollution concentration around 1900 occurred fifty years later than was broadly socially optimal this experience highlights the evolution of the demand for and supply of environmental quality in the context of economic growth and the nature of related market and government failures implying the necessity for adaptation rather than encouraging mitigation this experience may offer lessons for climate analysis and policy making

the concept of natural capital the natural environment is now commonly viewed as a form of capital asset or natural capital also included are ecosystems that provide important goods and services to the economy managing natural capital has consequences for sustainable development however there are contrasting weak versus strong sustainability views which in turn have implications for green accounting natural resource based sovereign wealth funds have emerged as key financial instruments for compensating resource depreciation with greater economy wide investments recent scientific evidence recommends demarcating safe operating spaces to limit exploitation of critical global biophysical subsystems or processes these challenges suggest that the concept of natural capital is pivotal to sound policy

cliometrics and time series econometrics some theory and applications the paper discusses a range of modern time series methods that have become popular in the past 20 years and considers their usefulness for cliometrics research both in theory and via a range of applications issues such as spurious regression unit roots cointegration persistence causality structural time series methods including time varying parameter models are introduced as are the estimation and testing implications that they involve applications include a discussion of the timing and potential causes of the british industrial revolution income convergence and the long run behaviour of english real wages 1264 1913 finally some new and potentially useful developments are discussed including the mildly explosive processes graphical modelling and long memory

historical wealth accounts for britain progress and puzzles in measuring the sustainability of economic growth we thank the leverhulme trust for funding this research under the project history and the future

strong sustainability critical natural capital and the capability approach this article is an attempt to conceptually improve the notion of strong sustainability by creating a rapprochement between its core concept critical natural capital and the capability approach we first demonstrate that the capability approach constitutes a relevant framework for analysing the multiple links between human well being and critical natural capital second we demonstrate that the rapprochement between critical natural capital and the capability approach can form both the normative basis and the informational basis for a deliberative approach to human development which embraces a strong sustainability perspective this conceptual rapprochement as illustrated in our case study opens up avenues of research towards the practical implementation of human development projects from a strong sustainability perspective

determining the optimal return on investment for an advertising campaign abstract in this this paper we adopt the point of view that advertising is an investment and propose a simple formula for calculating the level of media spending which maximizes the return on investment the information which must be supplied for the calculation is commonly available and we express the optimal expenditure level in terms which are meaningful to media planners we show that when maximizing return on investment not all of the allocated media budget should be spent

optimal advertising with stochastic demand a stochastic sequential model is developed to determine optimal advertising expenditures as a function of product maturity and past advertising random demand for the product depends upon an aggregate measure of current and past advertising called goodwill and the position of the product in its life cycle measured by sales to date conditions on the parameters of the model are established that insure that it is optimal to advertise less as the product matures additional characteristics of the optimal advertising policy are also established

welfare measurement under threats of environmental catastrophes abstract welfare measures under threats of environmental catastrophes are studied using the parable apparatus of weitzman and lofgren on the welfare significance of green accounting as taught by parable j environ econ manage 32 1997 139 153 the occurrence probability of the catastrophic events is driven at least partly by anthropogenic activities such as natural resource exploitation without external effects the green nnp is a genuine welfare measure vis a vis a particular parable economy often however the occurrence hazard constitutes a public bad treated as an externality by agents who ignore their own contribution to its accumulation in such cases the green nnp although accounting for the event hazard rate per se fails to properly internalize future effects on the hazard rate of current economic activities and as a result overestimates welfare the bias term associated with the green nnp is derived and expressed in a simple and interpretable form

social and spatial networks in labour markets social connections and referrals are ubiquitous in the labour market both on the job seeker side and on the employer side this article reviews recent developments in the study of referrals highlighting what we have learned regarding the use and impact of referrals on various labour market outcomes and pointing out the increasingly nuanced picture we are gaining on the effects of referrals it then discusses directions for future research emphasizing the importance of using newly available data and combinations of datasets and of making tighter connections with the burgeoning macro labour research that is based on a search and matching framework finally it evaluates the role of referrals from the point of view of policy makers discussing their social welfare implications and ways in which they could be explicitly incorporated into various labour market policies the importance of tighter collaboration between policy makers researchers employers and practitioners is stressed to conduct more rigorous experimentation and evaluation of potential referral based policies and programmes

analysis of genuine saving and potential green net national income portugal 1990 2005 abstract the context of this paper is the measurement of welfare and weak sustainability defined as non declining utility in dynamic economies i e comprehensive or green accounting we estimate green net national income gnni and genuine saving gs for portugal for the years 1990 to 2005 accounting for the disamenity of air pollution emissions the depreciation of commercial forests and the value of time discussing the implications of the assumptions underlying the inclusion of these terms in the green accounting model the influence of short run cycles is analyzed by estimating gnni excluding business cycles our results suggest that business cycles affect the sustainability message of gnni we find that potential gnni is growing and gs is positive in the analyzed period thereby not indicating a weak sustainability problem in portugal although both depict a trend towards unsustainability excluding technological progress there is a contradiction in the sustainability message of gnni and gs

sustainability and technical progress a rigorous model connects together the following three basic concepts 1 sustainability meaning the generalized future power of an economy to consume over time 2 green nnp meaning a current measure of national income that subtracts off from gnp not just depreciation of capital but also more generally depletion of environmental assets evaluated at current efficiency prices 3 technological progress meaning a projection onto the future of the so called solow residual a simple general formula is derived some crude calculations suggest a possibly strong effect of the residual which hints that our best present estimates of long term sustainability may be largely driven by predictions of future technological progress

a framework for the practical application of the concepts of critical natural capital and strong sustainability this paper develops a methodology for identifying that natural capital called critical natural capital cnc the maintenance of which is essential for environmental sustainability by consideration of the characteristics of natural capital of the environmental functions that these characteristics enable natural capital to perform and of the importance of these functions to humans and the biosphere it shows how sustainability standards in respect of these environmental functions may be derived the difference between the current situation and these standards is termed the sustainability gap the methodology that emerges from bringing these ideas together into a single analytical framework enables policy makers to identify the extent of current unsustainability the principal causes of it the elements and processes of natural capital the cnc which need to be maintained or restored to close the sustainability gap and the costs of so doing the framework should therefore be of use in identifying priorities and policies for moving towards environmental sustainability

social accounting and welfare measurement in a growth model with human capital this paper addresses social accounting and welfare measurement in an economy where human capital is an important factor in the economic system human capital accumulation depends on the time consumers spend in education however human capital is also a separate argument in the production function facing firms which gives rise to a production externality in a command optimum where the externality is internalized we show that an augmented nnp measure is the appropriate welfare indicator we also discuss the taxtransfer system required for the decentralized economy to reach a command optimum

social networks and inequality abstract about half of all vacancies are filled through networks of personal contact we consider the arrow loury conjecture that such labor market networks exacerbate inequality our central result is that referral networks display threshold behavior above a critical density of referrals qualified workers at all levels of the network are recruited with probability one below the threshold the probability of referral falls exponentially and workers low in the hierarchy are hired with probability zero an underclass emerges

the informal recruitment channel and the quality of job worker matches an analysis on italian survey data this article analyzes the consequences of being recruited through the informal channel in the italian labor market using data collected through a new survey implemented by institute for the development of the vocational training of workers isfol we find that while workers entering the labor market via professional ties enjoy a wage bonus and a reduction in entry times those recruited via family and friends referrals save on entry times but receive on average lower wages moreover the use of the family channel reduces the returns to education and is associated with the phenomenon of over education suggesting the existence of some mismatches between workers and jobs characteristics copyright 2011 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

the role of technological progress in testing adjusted net savings evidence from oecd countries abstract in this paper we investigate the relationship between comprehensive measures of savings and changes in future consumption in oecd countries this relationship is at the basis of the interpretation of adjusted net savings as a weak sustainability indicator and so evidence of its validity provides support to the use of this indicator we construct various measures of comprehensive savings for 20 oecd countries to include depletion from non renewable resources human capital investment and technological progress given their importance especially for rich countries we focus on the role of technical progress and human capital in the form of changes in education level we do not find strong evidence in favor of including green adjustments in the conventional net savings however we find compelling evidence for the inclusion of technological progress since this involves a forward looking term the above result suggests that to construct an indicator of weak sustainability from conventional net savings some estimate of future technological progress is needed

employer recruitment strategies and the labor market outcomes of new hires i introduction employers and job seekers are brought together for potential matches through their recruitment and job search activities employers may post help wanted signs run newspaper advertisements or seek referrals from private employment agencies job seekers may speak with friends and relatives solicit the aid of the state employment agency or simply walk in and apply these recruitment and search activities help both parties acquire information about each other and the more information they obtain prior to entering an employment agreement the higher the likelihood of a good employment match the crucial role of information in the labor market has been recognized since stigler 1962 but despite a voluminous literature on job matching and organizational behavior in labor markets we know far less about employers recruitment strategies than about job seekers search strategies as granovetter 1995 notes while people are finding jobs employers are finding people to fill them and their behaviors strategies and purposes play a central but often neglected role in the process of matching people to jobs this imbalance in research effort is explained more by a dearth of adequate data describing employer recruitment behavior than by lack of scholarly interest indeed labor economists sociologists psychologists and human resource management specialists have spent the last half century exploiting the meager existing data sets in efforts to learn about employer recruitment behavior in this article i address several empirical questions concerning employer recruitment using the multi city study of urban inequality mcsui a large cross sectional survey of employers in four metropolitan areas of the united states that has not been exploited for a detailed analysis of the relationships among recruitment strategies starting wages and vacancy duration despite the richness of the data set for this purpose the mcsui data contain detailed information on firm and job characteristics and most important for the purpose of this article indicators of the recruitment methods these employers used when hiring the most recently hired worker the data allow a number of interesting questions to be addressed concerning the link between employer recruitment choices and starting wages vacancy duration and the skill levels of new hires because there has been relatively little empirical research done by labor economists on employer recruitment this work with a relatively large representative sample of employers should enhance our understanding of a number of basic questions i consider three of these first i present evidence describing which recruitment methods employers use and how these vary by firm characteristics vacancy characteristics and the skill requirements of jobs i estimate a multivariate probit model with a separate equation for each of 10 recruitment choices in addition to providing information about the relationship of each recruitment method with each of the covariates this method has the attractive feature of allowing for an analysis of the relationships among the unobserved determinants of recruitment choice to my knowledge this methodology is new to the recruitment literature second i present regression evidence showing how vacancy duration varies by recruitment choices some recruitment methods can be expected to be faster than others in generating job applicants however an employer must invest time in screening the applicant pool so the recruitment methods that generate applicants quickly do not necessarily fill vacancies quickly therefore the link between recruitment methods and vacancy durations is an empirical question third i present evidence concerning the relationship between starting wages and recruitment methods in particular i augment standard log wage specifications based on the human capital model with recruitment choices and find that the recruitment variables have explanatory power even in the presence of all of the usual controls

investment and economic growth abstract the paper revisits the old question how much does investment contribute to economic growth building on recent work of maurice scott it suggests that the analysis of growth in developing as in the industrial countries would benefit from a capital accumulation approach in the following analysis economic growth is related to three variables all greatly influenced by the quality of economic policies the rate of investment the social rate of return to investment and the investment induced returns to labor

household entrepreneurship and social networks panel data evidence from vietnam en utilisant un panel de microentreprises familiales au vietnam cet article met en relation le reseau social des entrepreneurs et de leur menage avec la performance de la microentreprise familiale nous abordons deux questions connexes la premiere examine la possibilite d effets differencies de l emploi des membres de la famille par rapport a des travailleurs recrutes sur le marche du travail sur la performance de la microentreprise une deuxieme question aborde les effets respectifs des differentes dimensions des reseaux sociaux sur l efficience technique de la microentreprise l hypothese testee est que au dela du canal de la productivite du travail les entrepreneurs qui sont confrontes a un environnement social defavorable pourraient produire moins efficacement et realiser une valeur ajoutee plus faible que ce qui pourrait etre possible avec la meme quantite de ressources nous montrons qu il existe en effet un differentiel de productivite entre le travail familial et le travail recrute sur le marche et nos resultats attestent de la presence d effets defavorables du reseau social pour certains menages gerant une microentreprise nous soulignons aussi l importance des reseaux professionnels pour la reussite de l entreprenariat familial

the impact of informal networks on quit behavior sector disaggregation the change in the level effect accounts for only 0 35 0 41 percentage point of the 2 24 percentage point deceleration in labor productivity growth between the 1948 65 and 1973 78 periods the aggregate rate and level effects are not very sensitive to the degree of disaggregation 12versus 60 sector although some large level effects are evident within and across major industrial divisions they often cancel out in the aggregate however the level effect from the shift out of farming is quantitatively large and is close to the aggregate level effect using either 12 sector or 60 sector disaggregation although one can approximate the aggregate level effect by looking only at that for agriculture one should note that other fairly large level effects exist both within and across major industrial divisions other than agriculture

one sided sustainability tests with amenities and changes in technology trade and population abstract if an economy with multiple consumption goods including environmental amenities uniquely maximises present value with constant discounting it is unsustainable at some time if either of two measures augmented net investment or the change in augmented green net national product are zero or negative then augmented denotes that time is treated as a productive stock which includes in each measure the value of future exogenous changes in technology or terms of trade adjustments are found to make each measure a test for individual sustainability when population grows exogenously the practical and philosophical rationale for testing sustainability in a present value maximising and therefore fully prescribed development path is discussed

job information networks neighborhood effects and inequality this paper explores the theoretical and empirical literature to examine the use by different social groups of informal sources of information provided by friends relatives and acquaintances during job search and its consequences for the job market it also addresses the role of network structure and size the resource endowments of contacts and nature of the links between contacts to explain differences in the effects of job information networks in doing so the paper also turns to the sociology literature on job information networks and provides an economic perspective on such sociological concepts as strong versus weak ties inbreeding distance from structural holes etc the paper distinguishes between models of exogenous job information networks that is where individuals obtain job related information through a given social structure and endogenous job information networks which are social networks that result from individuals uncoordinated actions the paper pays special attention to such issues as physical and social proximity and sharing of information and discusses them in the context of the recent social interactions and neighborhood effects literature finally the paper outlines a model that integrates job information networks where interactions occur in business cycle frequencies with the dynamics of human capital formation which include the joint effects of parental community and neighborhood human capital and are set in life cycle frequencies for the purpose of organizing suggestions for future research and examining earned income inequality

assessing sustainability a comprehensive wealth accounting prospect an application to mozambique we estimate the wealth of mozambique in 2000 and 2005 in order to assess the sustainability of its development path our methodology builds on arrow et al 2010 we show that mozambican wealth increases through human and physical capital accumulation while the pressure on natural capital remains low the growth of total factor productivity enhances the outcome of the different capital assets but population growth has a strong downward effect on wealth per capita results suggest that mozambican development was sustainable between 2000 and 2005 but these remain ambiguous and are highly sensitive to data and assumptions used

do friends and relatives really help in getting a good job informal contacts are extensively used by both firms and workers to find jobs and fill vacancies the common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods this paper explores the empirical evidence for european countries using the european community household panel echp and discovers a large cross country as well as cross industry variation in the wage differentials between jobs found through informal and formal methods across countries and industries wage premiums and wage penalties to finding jobs through personal contacts are equally frequent this paper argues that such variation can be explained by looking at firms recruitment strategies in labour markets where employers invest largely in formal recruitment activities matches created through this channel are likely to be of average better quality than those created through informal networks a simple theoretical model is used to show that employers invest more in recruitment for high productivity jobs and for positions that require considerable training the empirical predictions of the theory are successfully tested using industry level data on recruitment costs

the concept of income in a general equilibrium this paper derives a concept of aggregate real income for a competitive economy in general equilibrium consisting of heterogeneous infinitely lived people and relates it to current and future consumption possibilities an important characteristic of our measure of income which we call real income is that deflation is carried out using a consumption deflator rather than any price index of output we suggest that it may be inappropriate to regard capital gains as income we also present a coherent treatment of the effects of changes to the terms of trade on real income and explain the implications of this for resourceexporting economies hicks 1939 defined income as the maximum amount a man can spend and still be as well off at the end of the week as at the beginning since then there has been a succession of attempts to apply this definition the problem is as hicks acknowledged that the correct interpretation of as well off is by no means clear weitzman 1976 and asheim 1997 suggest that income is equal to the level of consumption which could be sustained indefinitely out of the capitalized value of current income and equate this to being as well off at the end of the week as at the beginning eisner 1988 argues specifically that in a total incomes system effects arising from asset price changes and conventionally regarded as capital gains should be included with income here building on earlier work by sefton and weale 1996 asheim and weitzman 2001 and pemberton and ulph 2001 we provide a comprehensive account of the implications of the idea that as well off should be understood to mean that the present discounted value of current and future utility should be unchanged over the interval considered we work in the context of a general equilibrium taking the prices established in the general equilibrium as given we first look at income from the production side showing that in an economy where prices and the interest rates satisfy an intertemporal efficiency condition income along an equilibrium path can be interpreted as a weighted average of the value of the current and future consumption bundle plus a term adjusting for changes in the nominal price level converting prices to real prices by deflating by the divisia consumption price index removes the need for this adjustment these results are suggestive first they offer a way of defining the income of a household entirely in terms of its consumption possibilities second they indicate that to calculate real income deflation is best carried out using a price index of consumption this is a substantial divergence from current national accounting practice third because we have assumed constant returns there is a trivial aggregation result that aggregate income is equal to the sum of the incomes from the individual sectors

pollution tax design and green national accounting abstract this paper concerns social accounting when pollution gives rise to a consumption externality the purpose of the paper is to reconcile the willingness to pay technique as a means of collecting information put forward in earlier studies with the growth theoretical approach to social accounting this is accomplished by designing approximations of pigouvian emission taxes on the basis of currently available willingness to pay information the paper analyses the welfare effects of these taxes as well as to what extent they can be used to measure approximately the value of depletion of environmental capital in the national accounts

genuine savings and sustainability genuine savings gs has emerged as the leading economic indicator of sustainable economic development at the country level it derives from the literatures on weak sustainability wealth accounting and national income accounting we discuss the theoretical underpinnings of gs focusing on the relationship between changes in a nation s extended capital stock and the future path of consumption the indicator has entered widespread use propelled by the world bank s publications despite its varying performance as a predictor for future consumption notwithstanding the extensive body of literature reviewed promising future research avenues are identified

pricing the limits to growth from minerals depletion this paper evaluates the loss of global welfare from exhaustion of nonrenewable resources such as oil the underlying methodology represents an empirical application of some recent developments in the theory of green accounting and sustainability the paper estimates that the world loses the equivalent of about 1 percent of final consumption per year from finiteness of the earth s resources compared with a counterfactual trajectory where global extraction of minerals is allowed to remain forever constant at today s flow rates and extraction costs

capital theory and the measurement of sustainable development an indicator of weak sustainability the measurement of sustainable development is not without considerable difficulties yet this should not detract from the positive advances that can be made in this direction in this paper we present one form that a weak sustainability indicator can take derived from a simple but intuitive savings rule it incorporates the idea that the level of overall capital stock should be non decreasing although subject to qualification at this stage some interesting results emerge from the application of the rule to 18 countries

national accounts and environmental resources in the paper optimal growth theory is used to derive the appropriate definition of the net national product concept when there are environmental resources and environmental damage to take into account the basic conclusions are that conventional defined np should be corrected by deducting environmental damage and adding the value of the net change of all resources

on the welfare significance of national product under interest rate uncertainty abstract this paper examines the effects of uncertainty on the relationship between comprehensive nnp and sustainable equivalent consumption it is shown that the classical identity continues to hold in expectations when the discount factor is a stochastic diffusion process taking the form of geometric brownian motion with drift such a result may be useful as a point of departure for classifying the effects that various forms of uncertainty have on the welfare significance of national product

weak support for weak sustainability genuine savings and long term wellbeing in sweden 1850 2000 we study genuine savings as an indicator of long term welfare for sweden for the period 1850 to 2000 sweden has developed long series of comprehensive green national accounts for this entire per

investment specific technological change and growth accounting greenwood et al 1997 long run implications of investment specific technological change american economic review 87 3 342 362 and 2000 the role of investment specific technological change in the business cycle european economic review 44 91 115 and hercowitz 1998 the embodiment controversy a review essay journal of monetary economics 41 217 224 have claimed that the jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining growth to the contrary this paper shows that in its technology aspects their model is a special case of the jorgensonian growth accounting model what they call investment specific technological change is shown to be closely related to the more familiar concept of total factor productivity tfp growth statements about the one can be translated into statements about the other empirically differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains us economic growth are found to relate more to data than to methodology

this blessed plot when should capital gains on land be regarded as income national balance sheets for a number of advanced economies show land to be a valuable form of natural capital whose value has increased sharply over the last twenty years or so this paper investigates when or whether capital gains on land should be counted as a component of income while development projects can lead to increases in rental rates and land values it is shown that although the benefits any project should be counted as income increases in rental rates and land values should not normally be seen as additional real income however if land benefits from exogenous land saving technical progress the resulting capital gains can be seen as income applying the same principle to human capital it is shown on a steady growth path that these capital gains are equal to weitzman s 1997 growth premium in the relationship between income and sustainable consumption

adjusting green nnp to measure sustainability 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 i introduction how should net national product nnp be adjusted for the depletion of natural and environmental resources a prerequisite for examining this problem is to decide on an underlying notion of income at the personal level hicks 1946 defines income as the consumption that if kept constant would yield the same present value as a person s actual future receipts since market prices are not influenced by any single person this notion of income equals a person s maximal sustainable consumption at the national level national income can likewise be defined as the consumption that if kept constant would yield the same present value as the actual future consumption path unless the nation is a small open economy faced with given international prices this notion of national income will exceed

econometric issues in macroeconomic models with generated regressors the paper critically reviews the literature on the econometric issues raised by the use of generated regressors gr in empirical models the economic rationale for the use of gr is considered with examples being drawn from several macroeconomic examples including new classical macroeconomic ncm models which postulate monetary neutrality various estimation methods are discussed for models which include surprise or unexpected terms and the strengths and weaknesses of each approach are investigated drawing upon the work of mcaleer and mckenzie 1991 situations where the typically inefficient two step estimation 2se method will be efficient are highlighted problems of model misspecification and measurement errors are also investigated an empirical section highlights some of the dangers of using uncorrected 2se estimation results through a careful consideration of many recent attempts to test the ncm monetary neutrality hypothesis copyright 1993 by blackwell publishers ltd

comprehensive wealth and future consumption accounting for population growth economic theory predicts that the current change in national wealth broadly defined to include natural and human capital as well as produced capital genuine savings determines whether the present value of future changes in consumption is positive or negative theoretical research has focused on the effects of population growth on this relation but no rigorous empirical investigation has been conducted panel data for 64 developing countries during 1970 82 are used to test the effects of three adjustments for population growth including one that controls for omitted wealth although the adjustments have substantial impacts on estimates of genuine savings they lead to only limited improvements in the relation between those estimates and subsequent consumption changes even without adjustments for population growth adjustments for natural resource depletion improve the relation significantly policymakers and economists can interpret published estimates of genuine savings as signals of future consumption paths if and only if the estimates include adjustments for natural resource depletion but better estimates of capital stocks are needed before it can be confidently said that adjustments for population growth significantly improve the accuracy of those signals

a contribution to the theory of welfare accounting a kind of unified theory is proposed as a dynamic generalization of the standard consumer surplus methodology for evaluating welfare changes the unified theory allows rigorous dynamic welfare comparisons to be inferred between any two economic situations from just knowing current incomes and observing a short run market demand schedule essentially the change in present discounted future utility is exactly captured by the formula difference in current income plus consumer surplus this well known formula is thereby shown to cover a far wider class of welfare comparisons than is customarily treated in the textbook static case

towards a more inclusive and precautionary indicator of global sustainability abstract we construct a hybrid economic indicator of the sustainability of global well being which is more inclusive than existing indicators and incorporates an environmentally pessimistic physical constraint on global warming our methodology extends the world bank s adjusted net saving ans indicator to include the cost of population growth the benefit of technical progress and a much higher precautionary cost of current co 2 emissions future warming damage is so highly unknowable that valuing emissions directly is rather arbitrary so we use a novel inductive approach we modify damage and climate parameters in the deterministic dice climate economy model so it becomes economically optimal to control emissions in a way likely to limit warming to an agreed target here 2 c if future emissions are optimally controlled our ans then suggests that current global well being is sustainable but if emissions remain uncontrolled our base case ans is negative now and our corresponding modified dice model has an unsustained development path with well being peaking in 2065 current ans on an uncontrolled path may thus be a useful heuristic indicator of future unsustainability our inductive method might allow ans to include other very hard to value environmental threats to global sustainability like biodiversity loss and nitrogen pollution

quits and race previous studies estimate that black quit rates are lower than those of whites this paper suggests that these estimates under state black quit propensities because they neglect racial differences in quit responses to commuting time and local unemployment rates ignoring these differences the black quit effect appears to be negative controlling for them the residual race effect is positive and sufficiently large to account for all net black quits

comparing augmented sustainability measures for scotland is there a mismatch we estimate and compare two empirical measures of the weak sustainability of an economy for the first time the change in augmented green net national product gnnp and the interest on augmented genuine savings gs yearly calculations are given for each measure for scotland during 1992 1999 augmentation means including using projections to 2020 changed production possibilities enabled by exogenous technical progress or changing oil prices the change in augmented gnnp and the interest on augmented gs are both always positive showing no sustainability problem for scotland then according to the assumptions underlying our weak sustainability calculations however the former greatly exceeds the latter even when macroeconomic fluctuations are taken into account this is a mismatch which poses an unresolved problem with the theory resolving it may require respecifying the utility functions used in mainstream growth theory

augmenting the world bank s estimates ireland s genuine savings through boom and bust abstract the world bank computes estimates of genuine savings gs a leading indicator of sustainable development for most countries a well established literature has called for methodological enhancement this paper presents augmented estimates of irish gs throughout a period of unprecedented economic expansion and decline 1990 2016 a time series constructed predominantly from national sources includes the most comprehensive coverage of pollutants in the literature surveyed we apply a novel method to aid the property rights designation assessment required for transboundary pollutant accounting in sharp contrast to the world bank s estimates our findings suggest that a modern developed economy can exhibit signs of unsustainability furthermore extended environmental damages drive these results suggesting expanded country specific gs may diverge considerably from the world bank s estimates we find rapid economic development and rapid declines in environmental damages can occur concurrently and on the transition away from an unsustainable path

green accounting in imperfect market economies the idea of measuring the national welfare level by using the green nnp net national product has gained much attention lately this paper summarizes the research on social accounting in imperfect market economies by putting the results into a unified framework the main contribution of the paper is to relate the form of the national welfare measure to the functioning of the economic system and therefore to explicitly address the informational requirements implicit in social accounting

job contact networks abstract many workers hear about or obtain their jobs through friends and relatives the aim of this paper is twofold first we relate both individual and aggregate labor market outcomes to the network structure of personal contacts second we study strategic network formation to this purpose we develop a model specifying at the individual level both the decision to form contacts with other agents and the process by which information about jobs is obtained and transmitted we show that equilibrium networks always exist and that only moderate levels of network asymmetry can be sustained at equilibrium also we establish a general non monotonicity result on information flow and unemployment with respect to network size in symmetric networks

quantitative restrictions market power and productivity growth abstract this paper shows that when compared to tariffs quantitative restrictions qrs have a negative effect on innovation and productivity growth first qrs lead to stagnation in the steady state in the absence of domestic competition while tariffs allow for positive steady state growth second the replacement of a qr by a tariff equivalent leads to an increase in the short run incentives to innovation

genuine savings leading indicator of sustainable development abstract the world bank recently began publishing estimates of countries genuine savings a comprehensive measure of net investment across all forms of capital natural and human as well as produced this article presents the first empirical investigation of the consistency of the bank s estimates with the hypothesis that net investment should equal the difference between a country s average future consumption and its current consumption results show that the bank s estimates are consistent only with weak versions of this hypothesis and then only for developing countries moreover a simple autoregressive integrated moving average arima model outperforms any net investment measure comprehensive or conventional as a predictor of the difference between current and future consumption in sum the bank s net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries but they have little value for predicting the mag

entrepreneurial women and men two different species the ability of the self employed to create additional job opportunities is a fundamental concern given the huge increases in public resources targeted at new venture creation in the u k and other countries since 1979 this study initially concentrates on identifying differences in the personal and demographic characteristics of women and men in four potential labour market states namely unemployment waged employment single self employment and job creating self employment it then goes on to consider labour market transitions over a four year period between 1991 and 1995 the key findings are firstly that women entrepreneurs are better educated than their male counterparts and secondly that flows into self employment were considerably higher for men than women furthermore proportionately three times as many male self employed in 1991 had gone on to become job creating self employed by 1995

a dynamic model of job networking and social influences on employment abstract this paper explores an economy in which personal connections facilitate job search in the model a firm receives information on the productivity of those job applicants with social ties to its current employees in addition to providing a theory of networking the model endogenously generates two classic theories in economic sociology first there is a highly non linear relationship between average human capital in a group of socially connected individuals and the group s employment rate small changes in group composition may cause large changes in employment as suggested in wilson s social isolation explanation for high unemployment rates among poor african americans the model also supports granovetter s strength of weak ties hypothesis which holds that acquaintances are more valuable job contacts than close friends

accounting for the wealth of nations the net versus gross output controversy and its ramifications there has been a longstanding controversy over the use of net versus gross measures of national product in accounting for economic growth most recently reflected in several papers which have examined the role of environmental variables it is argued in this paper that the two measures are not substitutes but complements which reveal different aspects of the growth process gross product is the correct output concept for estimating the structure of production while net product is the correct concept for measuring the welfare consequences of economic growth an alternative to the conventional solow growth accounting framework is then presented in which the change in national wealth is decomposed into its component elements copyright 1992 by the editors of the scandinavian journal of economics

assessment of the theory of comprehensive national accounting with data for portugal we present time series tests of the quality of genuine savings and green net national income for predicting welfare changes these tests check the validity of the theory of comprehensive national accounting and more broadly of the theory of economic growth the value of technological progress is included as well as the effects of business cycles we use estimates for portugal as inputs overall our results indicate that both genuine savings and changes in green net national income have the same sign as changes in welfare but reject the hypothesis that the estimated comprehensive national accounting measures coincide with the theoretical expressions the results also suggest that comprehensive accounting indicators perform better than conventional national accounting indicators implying that in general the corrections proposed by the comprehensive accounting theory add explanatory power to conventional measures the exception is the inclusion of education expenditures and technological progress which decrease explanatory power excluding business cycles from green net national income increases the agreement with the theory comparing both indicators in general genuine savings presents better results

measuringincome and measuring sustainability we examine what interpretation can be given to inclusive income understood to be consumption plus the value of the net increase in all relevant capital stocks we introduce the concept of instantaneously constant value income defined as the maximum amount the economy can consume at a moment of time and keep the expected present value of utility of current and future generations constant we argue that this income concept captures some of the concerns underlying sustainability our main result is that inclusive income equals instantaneously constant value income we show that this result holds in a very general setting and in particular carries over to models incorporating technological progress when such progress can be captured by augmented stocks of knowledge an important implication of our main result is that it provides a very simple method for deriving inclusive income which does not involve any linearization of the hamiltonian

a dynamic approach to pes pricing and finance for interlinked ecosystem services watershed conservation and groundwater management a theory of payment for ecosystem services pes pricing consistent with dynamic efficiency and sustainable income requires optimized shadow prices since ecosystem services are generally interdependent this requires joint optimization across multiple resource stocks we develop such a theory in the context of watershed conservation and groundwater extraction the optimal program can be implemented with a decentralized system of ecosystem payments to private watershed landowners financed by efficiency prices of groundwater set by a public utility the theory is extended to cases where land is publicly owned conservation instruments exhibit non convexities on private land or the size of a conservation project is exogenous in these cases conservation investment can be financed from benefit taxation of groundwater consumers while volumetric conservation surcharges induce inefficient water use a dynamic lump sum tax finances investment without distorting incentives since the optimal level of conservation is generated as long as payments are correct at the margin any surplus can be returned to consumers through appropriate block pricing the present value gain in consumer surplus generated by the conservation induced reduction in groundwater scarcity serves as a lower bound to the benefits of conservation without explicit measurement of other benefits such as recreation biodiversity and cultural values

data envelopment analysis for unified efficiency evaluation an assessment of regional industries in china abstract data envelopment analysis has recently gained popularity and attention in operational and environmental assessment a common feature of previous studies is decreasing an input vector to decrease the vector of undesirable outputs which is referred to as natural disposability however little research has considered how to increase the amount of capital input for clean production technology to decrease the amount of undesirable outputs in a data envelopment analysis framework which is referred to as managerial disposability thus this paper proposes an improved approach that considers measuring unified operational and environmental efficiency for managerial disposability and compares this approach with the one for natural disposability the proposed approach provides a positive strategy to reduce undesirable outputs and improve unified efficiency through increasing capital investment in clean production technology a case study of regional industries in china in 2006 2010 utilizing this approach is also presented the empirical study shows that the unified efficiencies of regional industries in china have relatively high scores for managerial disposability and increasing capital investment is vital to achieve sustainable development in clean production technology

measuring technical progress in gross and net products abstract on the optimal path of a constant returns economy with capital and non renewable resource inputs the rate of exogenous technical progress in nnp for use in weitzman s technical progress premium equals the rate of progress in gross production divided by one minus the production elasticity of the resource flow

the capital gains from trade are not enough evidence from the environmental accounts of venezuela and mexico abstract in principle a country cannot endure negative genuine savings for long periods of time without experiencing declining consumption nevertheless theoreticians envisage two alternatives to explain how an exporter of non renewable natural resources could experience permanent negative genuine savings and still ensure sustainability the first one alleges that the capital gains arising from the expected improvement in the terms of trade would suffice to compensate for the negative savings of the resource exporter the second alternative points at technological change as a way to avoid economic collapse this paper uses the data of venezuela and mexico to empirically test the first of these two hypotheses the results presented here prove that the terms of trade do not suffice to compensate the depletion of oil reserves in these two open economies

capital gains and net national product in open economies it is shown within a given framework that with the world economy following an egalitarian path the aggregate capital gains being positive is equivalent to the interest rate tending to decrease this result is of importance for the concept of net national product in open economies in particular with positive aggregate capital gains an open economy cannot sustain consuming the return on its capital stocks since some part of the return must be used to augment the country s national wealth it is established that a country s share of world wide sustainable consumption equals its share of worldwide wealth

o papel das redes sociais na condicao do desempregado uma analise usando a teoria de matching the paper investigates whether the size of social networks can aect the unemployment rate of the economy therefore based on a theoretical model of matching i propose a technique for simulating the eects of networks on the employability of workers the proposal is applied to a database of portugal noting evidence that there is an optimal size of network that minimizes the unemployment rate

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

sustainability economics where do we stand abstract environmental economics which is a branch of resource economics the environment as a scarce resource is essentially about market failures the costs of pollution and pollution abatement and the economics of regulation sustainability economics includes the problem of maintaining economic growth while reducing pollution and or its impacts with special attention to the linked problems of energy supply not to mention the supply other exhaustible resources climate change and most urgently fossil fuel consumption there is a need for integration of resource and environmental economics under a new rubric sustainability economics

myopic solutions to affine dynamic models new sufficient conditions are presented for a dynamic process to have a myopic optimum and for a sequential game to possess a myopic equilibrium point an optimum or an equilibrium point is said to be myopic if it can be specified by solving a static optimization problem or a static nash game the results are applied to an aquaculture harvesting model and a dynamic oligopoly model with advertising decisions

on the welfare significance of green accounting as taught by parable abstract green nnp is a national accounting concept that subtracts off from gnp not just depreciation of capital but also depletion of environmental assets for a time autonomous technology green nnp has a rigorous welfare interpretation as an exact measure of the economy s future power to consume the present paper extends the standard framework to cover the case of labor augmenting technological progress for this special case of time dependence a powerful conceptual parable applies it is as if the conclusion from a simple minded welfare story told by the standard neoclassical one sector growth model covers a far more general situation involving any number of different types of capital any convex production possibilities set and fully optimizing behavior implications and applications are discussed

empirical testing of genuine savings as an indicator of weak sustainability a three country analysis of long run trends 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

racial differences in residential and job mobility evidence concerning the spatial mismatch hypothesis abstract the spatial mismatch hypothesis asserts that job decentralization adversely impacts the labor market outcomes of african americans this paper tests whether race and job access have an independent effect on the probability of a joint residential move and job change no evidence is found to indicate that race directly influences the joint probability the paper finds however that poor job access has an independent negative effect on the probability of a joint residential move and job change because african american residences are heavily concentrated in american central cities these results suggest that african american workers may not be able to fully adjust as new jobs are created in the suburbs

wood and industrialization evidence and hypotheses from the case of spain 1860 1935 abstract the aim of this paper is to study wood consumption during the industrial expansion which took place in the western world in the second half of the nineteenth and the first decades of the twentieth century through the analysis of the case of spain for this purpose we present the series of spanish wood consumption both as a raw material wrm and as firewood fw between 1860 and 1935 and we carry out two exercises with these series the first calculates the intensity of use iou which relates wood consumption in physical terms with the evolution of the gdp the second more complex exercise estimates a standard consumption function that allows us to know the elasticity of wrm with respect to the gdp the spanish price of wood and the spanish price of a substitute material like iron based on our results we discuss the lower dependence of the spanish industrial economy on wood the liberation of forest areas that may have occurred in spain as a result of industrialization and to what extent the trends observed for the spanish case can be extrapolated internationally the main conclusion is that industrialization transformed the uses of wood and though the importance of this resource per unit of gdp decreased its overall consumption increased generating greater pressure on forests at an international level

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

sector level decisions in a sustainability constrained economy despite two decades of debate there remains little consensus about what sustainability is and how it should be achieved economists primarily portray sustainability as a macro level concern but there has been less attention on the implications of this social objective for policies related to the management of individual resources this paper derives guidance for sector level planning and project analysis from a macro level norm of intergenerational fairness optimal sustainable management involves making tradeoffs between sectors we derive a criteria for sector level planning and project analysis that help make those tradeoffs without losing site of the sustainability goal

investing exhaustible resource rents and the path of consumption we set out dollar valued net national product for an economy with a wasting essential stock oil deposit we take up maintaining capital intact and locally unchan ging consumption the percentage change in net investment or genuine savings relative to the market rate of interest denotes whether current consumption is rising

winners and losers in the commodity lottery the impact of terms of trade growth and volatility in the periphery 1870 1939 abstract most countries in the periphery specialized in the export of just a handful of primary products for most of their history some of these commodities have been more price volatile than others and those with more volatility have grown much more slowly relative to the industrial leaders and to other primary product exporters this fact helps explain the growth puzzle noted by easterly kremer pritchett and summers more than a decade ago that the contending fundamental determinants of growth institutions geography and culture exhibit far more persistence than do the growth rates they are supposed to explain using a new panel database for 35 countries this paper estimates the impact of terms of trade volatility and secular change on country performance between 1870 and 1939 volatility was much more important for growth than was secular change and accounts for a substantial degree of the divergence in incomes within the sample of small commodity dependent periphery nations as well as under performance of the periphery as a whole relative to such nations as the us and western europe or core one channel of impact seems to be the adverse effect of volatility on foreign investment it appears that the terms of trade effects were asymmetric between core and periphery