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Environmental and Resource Economics

, Volume 5, Issue 4, pp 321–332 | Cite as

National product related welfare measures in the presence of technological change: Externalities and uncertainty

  • Thomas Aronsson
  • Karl-Gustaf Löfgren
Article

Abstract

The purpose of this paper is to discuss under what conditions welfare can be measured by observables related to the national product (or Hamiltonian along the optimal trajectory). Under nonattributable technological or environmental change, welfare will depend on time itself, meaning that the Hamiltonian along the optimal trajectory will be a biased measure of welfare. This result will also hold if we make the time dependence of welfare endogenous, by replacing technological change will externalities that are not internalized during optimization. On the other hand, if we take the externalities fully into account, then the Hamiltonian will represent the appropriate measure of welfare. Similar results also hold in the case of uncertainty, where we show that a ‘generalized’ Hamiltonian provides a welfare measure, and that the deterministic measures are special cases of their stochastic counterparts.

Keywords

Environmental Change Time Dependence Economic Policy Environmental Economic Technological Change 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Thomas Aronsson
    • 1
  • Karl-Gustaf Löfgren
    • 1
  1. 1.Department of EconomicsUniversity of UmeåUmeåSweden

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