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Comprehensive wealth and future consumption: Accounting for population growth

Publication ,  Journal Article
Ferreira, S; Hamilton, K; Vincent, JR
Published in: World Bank Economic Review
July 17, 2008

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. © The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development/the world bank. All rights reserved.

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Published In

World Bank Economic Review

DOI

EISSN

1564-698X

ISSN

0258-6770

Publication Date

July 17, 2008

Volume

22

Issue

2

Start / End Page

233 / 248

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 14 Economics
 

Citation

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Ferreira, S., Hamilton, K., & Vincent, J. R. (2008). Comprehensive wealth and future consumption: Accounting for population growth. World Bank Economic Review, 22(2), 233–248. https://doi.org/10.1093/wber/lhn008
Ferreira, S., K. Hamilton, and J. R. Vincent. “Comprehensive wealth and future consumption: Accounting for population growth.” World Bank Economic Review 22, no. 2 (July 17, 2008): 233–48. https://doi.org/10.1093/wber/lhn008.
Ferreira S, Hamilton K, Vincent JR. Comprehensive wealth and future consumption: Accounting for population growth. World Bank Economic Review. 2008 Jul 17;22(2):233–48.
Ferreira, S., et al. “Comprehensive wealth and future consumption: Accounting for population growth.” World Bank Economic Review, vol. 22, no. 2, July 2008, pp. 233–48. Scopus, doi:10.1093/wber/lhn008.
Ferreira S, Hamilton K, Vincent JR. Comprehensive wealth and future consumption: Accounting for population growth. World Bank Economic Review. 2008 Jul 17;22(2):233–248.
Journal cover image

Published In

World Bank Economic Review

DOI

EISSN

1564-698X

ISSN

0258-6770

Publication Date

July 17, 2008

Volume

22

Issue

2

Start / End Page

233 / 248

Related Subject Headings

  • Economics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 14 Economics