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Adjusting Green NNP to Measure Sustainability

Part of the Sustainability, Economics, and Natural Resources book series (SENR, volume 3)

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 nonconstant 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.

Keywords

Interest Rate Capital Stock Capital Gain Solow Model Consumption Path 
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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