Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 49: Investment Decisions, Future Consumption and Sustainability under Optimal Growth

Thomas Aronsson , Per-Olov Johansson () and Karl-Gustaf Löfgren
Additional contact information
Per-Olov Johansson: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden

Abstract: In this paper we derive an exact relationship between the net investment at a given point in time and future consumption plans. Our result is general in the sense that it neither requires a constant rate of time preference nor an exponential discount function. One interpretation of the result is in terms of the willingness to pay for net investments, while another interpretation relates to conditions for sustainability.

Keywords: Ramesy model; welfare measurement; national product

JEL-codes: D90

11 pages, March 1995

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