Measuring future dynamics of genuine saving with changes of population and technology: application of an integrated assessment model
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Theoretical and empirical studies have been conducted on the genuine saving (GS) based on neoclassical economic theory to assess sustainable development (SD). However, only market prices and statistical national accounts have been used in empirical studies due to limited data availability. The data availability limits to measure GS only in the past and current, causing a wide gap with theoretical results. In this paper, we propose computing GS using an integrated assessment model (IAM) as connected to the mainframe model of macroeconomy. This enables us to use shadow prices, rather than market prices, obtained through an IAM, which ensures substantial consistency among variables. An example would be endogenous capital–output ratio and the rate of TFP. Also, our indicator of GS is more comprehensive in that they now account for various resources, environmental degradation, and land use. Our simulation results, with a particular focus on GS with population change (GSn) and with technological change as well (GSnt), show a sustainable future for up to the end of the century thanks to declining population in the latter half of the century and technological progress, although GS without accounting for population and technology tend to be negative, driven by, among others, capital depreciation and net primary productivity degraded by land use.
KeywordsGenuine saving Future dynamics Population change Technological change Integrated assessment model
JEL classificationsQ01 Q56
The authors express their sincere appreciation to Kyoto University, the National Institute of Advanced Industrial Science and Technology (AIST), and the Institute of Applied Energy (IAE) for their hospitality and support. The model used in this study is based on our earlier collaboration with Takanobu Kosugi (Ritsumeikan University), Tsuyosi Adachi and Shinsuke Murakami (The University of Tokyo), Norihiro Itsubo (Tokyo City University), Ryota Ii (Pacific Consulting, Co., Ltd.), Atsushi Kurosawa (IAE), Hideto Miyachika (SRC, Co., Ltd.,). The lead author (K.T.) expresses his gratitude to those who collaborate with him in developing the model.
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