new evidence of energy growth nexus from inclusive wealth abstract gross domestic product gdp has been inappropriately used as the main indicator for assessing the sustainability of economic development for a long time inclusive wealth iw offers a new approach to assess sustainability by comprehensively measuring the productive base of the economy that involves three types of capital assets of nations produced human and natural capital and aggregates them into a single measure of wealth this study proposes an alternative to the literature on the conventional energy growth nexus that widely uses gdp as a proxy of the growth this study aims to investigate the impact of energy consumption on wealth in the iw framework and forecast the growth of iw over the next three decades for this purpose this study uses both parametric and non parametric analyses on 104 countries for 1993 2014 our results indicate that there is a negative and significant impact of energy consumption on iw growth suggesting an unsustainable pattern of world energy consumption using a machine learning technique it is forecasted that increasing the efficiency of energy consumption leads to a higher growth in average per capita iw this study also suggests that a shift to renewables is a precondition for sustainable development

intergenerational equity the capital environment trade off abstract this paper examines the trade off between capital accumulation and environmental quality that determines an intergenerationally equitable program according to the rawls maximin criterion this trade off is explored by an analysis of regular maximin programs in the framework developed by brock this results in a constant utility path supported by competitive prices with government imposed effluent charges and environmental rentals sufficient conditions for a regular maximin path to satisfy a hartwick rule in deciding on the combination of capital and environmental quality left to future generations are given

the impact of house prices on consumption in the uk a new perspective this paper proposes an alternative approach to the question of how house prices influence household consumption by focusing on their impact on mortgage equity withdrawal and household saving household level data are used to derive a measure of expected and unexpected changes in house prices these are then incorporated into a recursive bivariate probit model of the decision to withdraw housing equity and save the results suggest that households respond to changes in their housing wealth primarily by increasing their mortgage borrowing rather than by decreasing their savings although this is mainly for younger households however while changes in housing wealth do not have a direct impact on household saving they do have an important indirect impact since they increase the likelihood that the household will withdraw equity which in turn has a negative impact on household saving

valuing the attributes of renewable energy investments increasing the proportion of power derived from renewable energy sources is becoming an increasingly important part of many countries s strategies to achieve reductions in greenhouse gas emissions however renewable energy investments can often have external costs and benefits which need to be taken into account if socially optimal investments are to be made this paper attempts to estimate the magnitude of these external costs and benefits for the case of renewable technologies in scotland a country which has set particularly ambitious targets for expanding renewable energy the external effects we consider are those on landscape quality wildlife and air quality we also consider the welfare implications of different investment strategies for employment and electricity prices the methodology used to do this is the choice experiment technique renewable technologies considered include hydro on shore and off shore wind power and biomass welfare changes for different combinations of impacts associated with different investment strategies are estimated we also test for differences in preferences towards these impacts between urban and rural communities and between high and low income households

ecosystem service valuation for national accounting a reply to obst hein and edens 2016 while recent experimental frameworks for national ecosystem service accounting have shown substantial progress in our view some crucial methodological issues remain that deserve further consideration before setting final standards in response to the landmark work of obst et al environ resour econ 64 1 23 2016 doi 10 1007 s10640 015 9921 1 we provide arguments with regard to the suitability of particular valuation approaches generally we agree that respective valuation methods need to produce values that are consistent with national accounting standards such as representing exchange values however we disagree with their conclusions regarding specific valuation techniques firstly the circumstance that methods used for estimating shadow prices can also be used to derive consumer surplus does not justify the general exclusion of all shadow pricing methods for valuation of ecosystem services for national accounts especially for public ecosystem services secondly that preference based methods can also be used to assess welfare changes does not imply that cost based methods are generally better suited for ecosystem accounting to the contrary we see an essential need for preference information in accounting contexts thirdly that accounting standards use a written down replacement cost approach does not mean ecosystem accounting requires to employ a replacement cost approach to the contrary we argue that assessing ecosystem degradation through restoration costs would be in line with writing down depreciation but we also point to its limits

boom in bust out young households and the housing price cycle abstract the uk experienced a major residential real estate boom bust cycle from the mid 1980s to the mid 1990s accompanied by unprecedented shifts in the owner occupancy rate of young households previous empirical analyses have pointed toward income changes and financial deregulation as the likely causes of this episode with little to say about the differential effects on various age groups we show that in a life cycle model with income heterogeneity and credit constraints the observed co movements of housing prices and owner occupancy rates can be explained as an equilibrium response to income and credit market shocks our findings suggest that the financial liberalisation of the early 1980s was crucial for the unparalleled increase in the owner occupancy rate of young households during the boom

trends in household saving don t justify tax incentives to boost saving despite diverse trends in household saving in oecd countries many governments are introducing tax incentives designed to boost saving by particular groups such schemes have been justified by many trends including increasing income inequality ageing populations and greater cross border competition it is dangerous however to base policy on what is happening to aggregate household saving alone first personal saving should be viewed within a lifecycle context saving may look inadequate today but households may already have made plans to redress this in future second data on aggregate saving conceal significant differences between different household groups only disaggregation yields reliable inferences on which policy can be based in particular it is impossible to assess the consequences of demographic changes without analysis that distinguishes between different generations we reassess household saving by computing the evolution of lifetime profiles of consumption income and saving of different cohorts over time and then analyse the effect of demographic and other changes we find little evidence for the assertion that tax incentives to promote national saving are needed now to stave off a future drought in household saving

from fossil fuels to renewables the role of electricity storage abstract electricity storage represents a solution to curb carbon emissions by enabling more use of intermittent renewable energy our goal is to empirically analyze the determinants of innovation in electricity storage and its role in fostering technological innovations in renewable and conventional electricity generation using a global firm level data set of electricity patents from 1963 to 2011 we find that better electricity storage promotes innovation not only in renewable energy but also in conventional technologies specifically our estimates show that an additional storage patent increases the probability to apply for patents in renewable energy and efficiency improving fossil fuel technologies two years from now by 1 09 and 0 65 respectively this implies that improved electricity storage technologies can boost the energy efficiency of conventional fossil fuel fired power plants as well as increase the use of renewable electricity thus the ability of electricity storage to curb carbon emissions depends on the competitiveness of renewable energy against conventional electricity generation and conventional power generation mix as storage increases fossil fuel efficiency and reduces ramping costs

national accounting and the valuation of ecosystem assets and their services there has long been interest in integrating the value of environmental stocks and flows into standard measures of economic activity and wealth in particular through the development of adjusted measures of gdp and extended measures of national wealth this paper examines how the valuation of ecosystem services and ecosystem assets can be undertaken in an integrated national accounting setting we clarify the relevant valuation principles most significantly the need to apply the concept of exchange values and explain why the integration of ecosystem services necessitates an extension of the standard production boundary used in economic measurement the main implications of an accounting approach are discussed including the need to distinguish benefits from services the need for valuation methods that exclude consumer surplus and the importance of aligning measures of income and degradation remaining challenges include the treatment of low or negative rents accounting for ecosystem disservices and the derivation of values for ecosystem assets meeting these challenges and advancing work in this area should be the joint focus of economists ecologists and accountants

do tax incentives for saving in pension accounts cause debt accumulation evidence from danish register data abstract this paper applies a quasi experimental research design on a danish 2010 policy that reduced tax incentives for saving in annuity pension schemes to show significant substitution of savings from retirement accounts to gross debt repayments we find that for every 1 danish currency unit reduction in retirement savings 31 cents goes to debt repayments taking into account all types of savings we find full crowding out consistent with previous findings we document that the effect is driven by a minority about 23 percent who actively rebalance their savings

paradoxical consumption behavior when economic activity has environmental effects in a model where enhanced economic activity accumulation of produced capital leads to environmental eects depletion of natural capital competitive steady states corresponding to dierent discount rates are compared for positive discount rates the steady state stock of produced capital may exceed the size maximizing sustainable consumption this implies paradoxical consumption behavior that is a lower discount rate may be associated with lower steady state consumption the theoretical significance of this phenomenon for intergenerational equity is discussed and examples indicating the empirical relevance of the underlying assumptions are presented

the evolution of hyperbolic discounting implications for truly social valuation of the future abstract we explore the standard expected utility model and alternatives to it we then examine the behavioral and neurological evidence for hyperbolic discounting we discuss evidence related to the neurological and behavioral evolution of discounting in non human animals and in humans we explore new findings about the importance of sociality in human behavior and the implications for truly social time preference finally we discuss the implications of the neurological evidence on discounting for social environmental valuation in particular the implications for very long run decisions such as those involved in climate change mitigation and biodiversity preservation

housing markets consumption and financial liberalisation in the major economies abstract this paper analyses the implications of relaxing credit restrictions in housing finance markets a theoretical model of the interaction of financial and housing markets and forward looking agents is developed the effects of financial liberalisation in the model are analysed and evidence from the u s a and u k on the impact of easing credit restrictions is presented estimates are also made of the degree to which credit restrictions may bind on households in those countries where the range of mortgage products on offer is still more limited than in the u k and u s a simulations are undertaken to gauge the effect on consumption saving and bequests of wealth of possible future convergence in national systems of housing finance

the uk consumption boom of the late 1980s aggregate implications of microeconomic evidence two competing explanations of the uk consumer boom in the late 1980s are the financial liberalisation imperfect housing market hypothesis of muellbauer and murphy and the expectations hypothesis of king we use 15 years of family expenditure surveys and cohort analysis to investigate to what extent these two hypotheses agree with observed changes in consumption patterns we find that the housing markets explanation accounts for much of the increase by older cohorts but cannot be reconciled with the marked rise in expenditure levels of younger households a simple simulation exercise shows instead that the expectations hypothesis can generate increases of expenditure by young consumers of the magnitude observed in our data

house price shocks and household indebtedness in the united kingdom we use household panel data to explore the link between changes in house prices and household indebtedness both secured on housing assets and unsecured in the united kingdom we show that households which are borrowing constrained by a lack of housing equity as collateral make greater use of unsecured debt such as credit cards or personal loans in response to rising house prices which relax this constraint such households are more likely to refinance and to increase their indebtedness relative to unconstrained households however for most households house price movements appear to have little impact on indebtedness

changes in the distribution of housing wealth in great britain 1985 91 during which time sizeable real capital gains accrued to owner occupiers particularly those who were already owner occupiers at the start of this period the paper constructs housing wealth estimates disaggregated by household from the 1985 ghs and 1991 bhps wave 1 in order to explain the distributional consequences of the housing market experience the paper finds that there has been a modest increase in housing wealth inequality but one that is more pronounced for gross housing wealth compared with equity this growth has been offset by the growth in owner occupation and the benefits of the council house right to buy scheme

the net national product and exhaustible resources the effects of foreign trade abstract it is the widely held view that estimates of national income should be corrected for the value of the extracted exhaustible resource stock this correction implies the counter intuitive result that the national income of an oil producer is unaffected by its vast oil reserves in this paper we review the definition of national income and discuss its relation to national welfare we show that an extra income should be imputed to the resource owning country based on the exportable resource stock part of the net adjustment for resource use is made to the income of the resource using and not the resource producing country

substitution between clean and dirty energy inputs a macroeconomic perspective in macroeconomic models the elasticity of substitution between clean and dirty energy inputs within the energy aggregate is a central parameter in assessing the necessary conditions for long run green growth using new sectoral data in a panel of 26 countries we formulate specifications of nested constant elasticity of substitution production functions that allow estimating this parameter for the first time we present evidence that it significantly exceeds unity a favorable condition for promoting green growth

a life cycle consistent empirical model of family labour supply using cross section data this paper estimates a utility maximising model of the joint determination of male and female labour supplies using a sample of married couples from the u k family expenditure survey the emphasis is on the estimation of within period preferences that are consistent with intertemporal two stage budgeting under uncertainty however the approach we adopt provides an alternative method of estimating certain aspects of life cycle behaviour to the fixed effects constant approach of heckman and macurdy 1980 macurdy 1981 and browning deaton and irish 1985 moreover it relaxes some of the underlying restrictions that are implicit in these constant models under uncertainty

is there really a green paradox abstract in the absence of a co2 tax the anticipation of a cheaper renewable backstop increases current emissions of co2 since the date at which renewables are phased in is brought forward and more generally future emissions of co2 will decrease the effect on global warming is unclear green welfare falls if the backstop is relatively expensive and full exhaustion of fossil fuels is optimal but may increase if the backstop is sufficiently cheap relative to the cost of extracting the last drop of fossil fuels plus marginal global warming damages as then it is attractive to leave more fossil fuels unexploited and thus limit co2 emissions we establish these results by analyzing depletion of non renewable fossil fuels followed by a switch to a clean renewable backstop paying attention to timing of the switch and the amount of fossil fuels remaining unexploited we also discuss the potential for limit pricing when the non renewable resource is owned by a monopolist finally we show that if backstops are already used and more backstops become economically viable as the price of fossil fuels rises a lower cost of the backstop will either postpone fossil fuel exhaustion or leave more fossil fuel in situ thus boosting green welfare however if a market economy does not internalize global warming externalities and renewables have not kicked in yet full exhaustion of fossil fuel will occur in finite time and a backstop subsidy always curbs green welfare

does nnp growth indicate welfare improvement abstract we show that instantaneous increases in real nnp over time are an accurate indicator of true dynamic welfare improvements this highlights a connection between the theory of green or comprehensive national income accounting and the theory of real price indices

backward and forward looking shadow prices in inclusive wealth accounting an example of renewable energy capital abstract attaching weights to the list of capital assets is crucial in inclusive wealth accounting and sustainability assessments these weights or shadow prices can be constructed in theory by looking prospectively at future social profits that the capital in question is expected to yield in practice however both backward and forward looking shadow prices are used this study confirms that these two approaches are theoretically equivalent under strong assumptions and reviews how and why the two approaches are taken the two approaches are then applied to renewable energy capital rec which has rarely been done in either produced or natural capital accounting and sustainability assessments renewable energy capital provides an ideal example with which to compare the two approaches as it is a class of produced capital that substitutes both produced and natural capital the numerical results of both approaches demonstrate that renewable energy capital starts to account for as large a share as natural capital does if not produced capital or inclusive wealth in those countries where natural capital is poorly endowed and investment in renewable energy capital has been witnessed

intertemporal consumption durables and liquidity constraints a cohort analysis we provide a theoretical framework to analyse the response of life time maximizing consumers to intertemporal prices of non durable goods and durable goods when the borrowing limit depends on the market value of the stock of durables owned by the consumer we use pseudo panel data on purchases of non durables and durable goods cars and demographic characteristics from the uk family expenditure survey as well as estimates of the durable stock constructed using the uk national travel survey to estimate the equations derived in the first part of the paper we evaluate the shadow prices of these restrictions which were significantly positive for younger consumers in the mid seventies and immediately prior to the 1982 financial liberalisation

do house prices affect consumption a re assessment of the wealth hypothesis this paper revives the debate in the literature about the relationship between house prices and consumption by exploring conflicting results in the uk campbell and cocco 2007 find that old owners benefit most from a house price increase and young renters least confirming the so called wealth hypothesis in contrast attanasio et al 2009 find that house prices have the same impact on consumption across age groups we rule out several potential explanations related to data construction and provide evidence that the functional form can reconcile the conflicting results in the two papers

available capital utilized capital and shadow prices in inclusive wealth accounting abstract previously accounting for comprehensive or inclusive wealth has focused on the supply side of capital assets however human well being created by capital assets inherently depends on the demand side as well in particular if capital is not utilized at its full capacity then realized or actual human well being may be less affected by available capital than by effective or utilized capital in principle this notion is embodied in a shadow price which is defined as the marginal contribution of capital assets to social well being the shadow price becomes higher if the underlying resource allocation mechanism improves in practice one can account for such underutilization by adjusting shadow prices to reflect only the utilized quantity of the capital in question furthermore capital utilization has different nuanced implications for produced human and natural capital and its implications even vary across some classes of natural capital within this line of theoretical thought we provide empirical estimates of the changes in inclusive wealth and sustainability of selected developing countries in recent years by comparing available and utilized capital assets we find that sustainability assessments may be revised based on utilized capital due to among others human capital underemployment and non renewable natural capital accessibility

is the uk balance of payments sustainable the uk current account deficit john muellbauer and anthony murphy the uk has a large and persistent current account deficit policy makers argue that the deficit is easily financed temporary and therefore not a sign of structural weakness we examine the conditions in which it is appropriate for a country to overspend its current income with the intention of repaying loans out of future income these include an increase in international capital mobility larger net holdings of foreign assets and expectations of faster productivity growth all three apply to the uk so official reasoning is in part correct even so for several decades there has been a trend deterioration of uk trade performance most markedly in manufacturing and we detect no underlying improvement in the 1980s we highlight structural deficiencies in both demand and supply on the demand side we show the importance of rising house prices and easier consumer credit in fuelling the consumer boom to an unwarranted extent this we trace to unjustifiable subsidies to house ownership on the supply side we stress vastly inadequate investment in skill formation education and physical capital these structural deficiencies lead us to a less optimistic view than official policy we draw the policy lessons for the uk and consider whether continental europe will face similar problems as financial markets are liberalized

valuing a wind farm construction a contingent valuation study in greece abstract our analysis is based on data from a double bounded dichotomous choice contingent valuation study implemented to elicit public attitudes towards renewable energy generation and their willingness to pay for the construction of a wind farm in the area of messanagros in the island of rhodes greece results indicate that there are significant positive values deriving from the proposed project respondents report a mean willingness to pay a premium in their bi monthly electric bills of 8 86 for the sole purpose of the construction of the wind farm the estimated economic benefits to the local population are weighed against the investment cost in a cost benefit analysis to inform policy making and implications for eu energy policy are provided

the welfare economic theory of green national accounts this paper takes a critical look at the literature on green national accounts the problem studied is to find a linear index of economic variables that responds to perturbations in the same direction as social well being the thesis of a large literature that net national product which is a flow is that index in closed economies is shown in some interpretations to be simply false and in others to suffer from deep estimation problems it is argued that capital depreciation using shadow prices should certainly be included in national accounts but that the right welfare index is a comprehensive measure of wealth defined as the shadow value of an economy s stock of all capital assets it is shown that comprehensive wealth is usable as a criterion for policy evaluation as well as for determining sustainable economic development

comprehensive versus inclusive wealth accounting and the assessment of sustainable development an empirical comparison abstract this paper compares alternative wealth estimates reported by the world bank and in the inclusive wealth reports although theoretical limitations and shortcomings are widely acknowledged in the literature the extent to which the alternative approaches to wealth accounting matter empirically is not well known comparing the alternative data in levels shares growth rates and monetary sustainability indices derived from them major differences emerge between oecd and non oecd countries for the former the alternative wealth estimates seem complementary but only if a key assumption made in the derivation of inclusive wealth is violated for the latter the data seem much less useful for example depending on which data source is used for the group of low income countries the share of natural capital in total wealth is either 36 8 or 60 4 suggesting that extreme care must be taken if the composition of wealth were to be used to inform policy making neither wealth data set provides a definite guide to economic sustainability but a combination of indices derived from both might be useful in a holistic assessment of sustainability

cost comparisons for wind and thermal power generation abstract comparisons of generation costs between renewable and conventional generation technologies are a key input to energy policy discussions however there are many pitfalls around generation cost estimation even apparently reliable sources can quote widely differing figures this paper reviews methodologies and data sources to determine the main sources of uncertainty in the estimation of the costs of wind coal and natural gas generation based on illustrative cost calculations for the us denmark and india it finds that the cost elements most likely to confound generation cost calculations are fuel costs and particularly for renewable generation the cost of capital it explores the impact on calculated generation cost of alternative approaches to estimating these parameters the results should be of particular value to users of generation cost estimates who are concerned about the reliability of the information they have to work with

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

using conjoint analysis to quantify public preferences over the environmental impacts of wind farms an example from spain this paper focuses on the effect on people s utility of the potential environmental impacts of wind farm developments we report on research designed to provide insight into their preferences and we show how two alternative choice modelling techniques can be used to estimate them our results show that significant social costs in the form of environmental impacts can be associated with wind farm developments as relative environmental values are revealed by these methods it would be possible to develop wind farms in such a way that minimises the total social costs of the investment and which maximises its net benefits

evaluating projects and assessing sustainable development in imperfect economies we are interested in three related questions 1 how should accounting prices be estimated 2 how should we evaluate policy change in an imperfect economy 3 how can we check whether intergenerational well being will be sustained along a projected economic programme we do not presume that the economy is convex nor do we assume that the government optimizes on behalf of its citizens we show that the same set of accounting prices should be used both for policy evaluation and for assessing whether or not intergenerational welfare along a given economic path will be sustained we also show that a comprehensive measure of wealth computed in terms of the accounting prices can be used as an index for problems 2 and 3 above the remainder of the paper is concerned with rules for estimating the accounting prices of several specific environmental natural resources transacted in a few well known economic institutions

the life cycle model of consumption and saving a central implication of life cycle models is that agents smooth consumption we review the empirical evidence on smoothing at frequencies from within the year up to across a lifetime we find that life cycle models particular those which incorporate realistic features of markets and goods have more empirical successes than failures we also show that some apparent deviations from theoretical predictions imply very small welfare losses for agents finally we emphasize that the coherence of life cycle models imposes an important discipline when incorporating new features into models

does inequality lead to a financial crisis abstract the recent global crisis has sparked interest in the relationship between income inequality credit booms and financial crises rajan 2010 and kumhof and ranciere 2011 propose that rising inequality led to a credit boom and eventually to a financial crisis in the us in the first decade of the 21st century as it did in the 1920s data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships credit booms heighten the probability of a banking crisis but we find no evidence that a rise in top income shares leads to credit booms instead low interest rates and economic expansions are the only two robust determinants of credit booms in our data set anecdotal evidence from us experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality credit crisis nexus rather it points back to a familiar boom bust pattern of declines in interest rates strong growth rising credit asset price booms and crises

house prices and consumer spending recent empirical work shows large consumption responses to house price movements this is at odds with a prominent theoretical view which using the logic of the permanent income hypothesis argues that consumption responses should be small we show that in contrast to this view workhorse models of consumption with incomplete markets calibrated to rich cross sectional micro facts actually predict large consumption responses in line with the data to explain this result we show that consumption responses to permanent house price shocks can be approximated by a simple and robust rule of thumb formula the marginal propensity to consume out of temporary income times the value of housing in our model consumption responses depend on a number of factors such as the level and distribution of debt the size and history of house price shocks and the level of credit supply each of these effects is naturally explained with our simple formula

the effect of the discount rate on depletion of exhaustible resources this paper argues that despite its widespread acceptance in the literature the basic proposition that a reduction an increase in the discount rate leads to greater conservation faster depletion of an exhaustible resource is not generally valid it shows that the effect of the discount rate on the rate of resource depletion depends on capital requirements for production of the substitute and extraction of the resource and on the size of the resource stock in fact it shows that there always exist at least two ranges of the resource stock size for which the effect is opposite to that conventionally believed

can renewable energy power the future fossil fuels face resource depletion supply security and climate change problems renewable energy re may offer the best prospects for their long term replacement however re sources differ in many important ways from fossil fuels particularly in that they are energy flows rather than stocks the most important re sources wind and solar energy are also intermittent necessitating major energy storage as these sources increase their share of total energy supply we show that estimates for the technical potential of re vary by two orders of magnitude and argue that values at the lower end of the range must be seriously considered both because their energy return on energy invested falls and environmental costs rise with cumulative output finally most future re output will be electric necessitating radical reconfiguration of existing grids to function with intermittent re

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

resource depletion and sustainability in small open economies abstract exogenous price changes affect the amount that a small country exporting natural resource commodities must invest to sustain its consumption level the necessary amount is given by the difference between hotelling rent and the discounted sum of future terms of trade effects capital gains the latter term is found to be large relative to the former in the case of petroleum depletion in indonesia this suggests that resource rich countries will need to invest more than previously expected to sustain their consumption levels if natural resource prices continue their long term historical decline

the inclusive wealth index a critical appraisal abstract among recent high profile propositions to revise national accounts and to provide new indicators of sustainability and well being the inclusive wealth framework and the related inclusive wealth index iwi undoubtedly stand out as one of the most promising endeavours built up at the confluence of welfare development and sustainability economics the indicator has been designed to bring information about the wealth of nations and their sustainability in a comprehensive way the inclusive wealth framework is nevertheless fraught with limitations due to questionable theoretical assumptions gaps in data availability unrealistic assumptions about the future and inability to account for distributional issues we propose a non exhaustive critical appraisal of the index and its underlying framework we conclude that these limitations undermine its capacity to fulfil the requirements of a satisfactory sustainability indicator we argue that most problems lie in the substantial discrepancy between the inclusive ambition of the indicator and the scarce means to implement it whereas the interconnectedness of the various assets that constitute wealth as well as their complex evolution through time are acknowledged by the proponents of inclusive wealth the way the iwi is computed is rather a mere addition of layers of actuarial like monetary values for a not inclusive yet range of capital assets caution is thus warranted while using such an approach and shorter range alternatives to pursue similar goals are proposed

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

cost and income based measures of human capital human capital is increasingly believed to play an important role in the growth process however adequately measuring its stock remains controversial in this paper three general approaches to measurement are identified cost based income based and educational stock based this survey focuses on the first two approaches and provides a critical review of the theories and their applications to data from a range of countries particular emphasis is placed upon the work of jorgenson and fraumeni 1989 1992 and some new results for new zealand based upon their approach are also presented

house price shocks negative equity and household consumption in the united kingdom we examine the impact of unanticipated housing capital gains on consumption behavior using data from the british household panel survey and county level house price data we condition the models on household financial expectations and on household real financial capital gains imputed from the family resources survey we find a marginal propensity to consume out of unanticipated shocks to housing wealth of 0 01 omitting the measure of financial expectations biases the results upward we find little evidence of heterogeneity in responses of young and old homeowners but differences between owners and renters we also find asymmetric behavior between house price rises and falls and a disproportionate impact on saving if the household had negative housing equity at the start of the period jel d91 e21 r31 c 2010 by the european economic association

the hartwick rule myths and facts we shed light on the hartwick rule for capital accumulation and resource depletion by providing semantic clarifications and investigating the implications and relevance of this rule we extend earlier results by establishing that the hartwick rule does not indicate sustainability and does not require substitutability between man made and naturalcapital we use a new class of simple counterexamples i to obtain the novel finding that a negative value of net investments need not entail that utility is unsustainable and ii to point out deficiencies in the literature

rural versus urban preferences for renewable energy developments development of renewable energy resources such as wind farms and hydro electric schemes are being promoted as a new method of expanding and diversifying employment in rural areas however such energy projects are associated with a range of environmental impacts which might be detrimental to other economic activities such as those based on nature tourism the authors use a choice experiment to quantify peoples preferences over environmental and employment impacts that may result from the deployment of renewable energy projects in rural areas of scotland focussing in particular on any differences between the preferences of urban and rural dwellers and on heterogeneity within these groups rural and urban households are shown to have different welfare gains which are dependent on the type of renewable energy technology and on the scale of project under consideration

consumption over the life cycle and over the business cycle the main aim of this paper is to assess the validity of the life cycle model of consumption in particular we address an issue that has recently received much attention especially in the macroeconomic literature that of excess sensitivity of consumption growth to income growth we do this using a time series of cross sections and a novel and flexible parameterization of preferences the former allows us to address aggregation issues directly while with the latter we can allow both the discount factor and the elasticity of intertemporal substitution eis to be affected by various observable variables and lifetime wealth the main findings can be summarized as follows i the excess sensitivity of consumption growth to labor income disappears when we control for demographic variables this is true both at life cycle and business cycle frequencies ii estimation of a flexible specification of preferences indicates that the elasticity of intertemporal substitution is a function of several variables including the level of consumption the eis increases with the level of consumption as expected iii the variables that change the eis are also important in explaining why we observe excess sensitivity over the business cycle iv we are able to reconcile our results with those reported both in the macro and micro literature v in our specification the elasticity of intertemporal substitution is not very well determined this result however should be taken with care as we have not made an effort to construct a preferred specification which would probably include additional controls for labor supply behavior the evidence presented shows that the life cycle model cannot be easily dismissed indeed we believe that the model does a good job at representing consumption behavior both over the life cycle and over the business cycle