The role of technological progress in testing adjusted net savings: evidence from OECD countries

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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.

Original languageEnglish
Article number106382
JournalEcological Economics
Volume164
DOIs
Publication statusPublished - 1 Oct 2019

Keywords

  • Adjusted net savings
  • Comprehensive accounting
  • Indicators of weak sustainability
  • Technological progress

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