Umeå Economic Studies, Department of Economics, Umeå University
No 574:
Welfare Measurement in an Imperfect Global Economy: Rich vs Poor Regions
Thomas Aronsson ()
, Kenneth Backlund ()
and Karl-Gustaf Löfgren ()
Abstract: This paper concerns green accounting in a global economy,
which is characterized by transboundary environmental problems. The world
is divided into two separate regions, and the regions differ substantially
with respect to income per capita, emissions of greenhouse gases per
capita, population growth, and how the production possibility is influenced
by greenhouse gases. By using a numerical general equilibrium model, the
purpose is to analyze the possibility of establishing meaningful social
accounts based on the current value Hamiltonian, which constitutes a
measure of the green NNP in utility terms. The results show that the
current value Hamiltonian underestimates welfare in the rich region and
overestimates welfare in the poor region. In addition, having incorporated
the present value of future technological change in the welfare measure,
very little precision is gained by going further and trying to measure the
value of externalities from greenhouse gases.
Keywords: Transboundary environmental problems; social accounting.; (follow links to similar papers)
JEL-Codes: D62; I31; O39; (follow links to similar papers)
26 pages, November 15, 2001
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