The Weitzman Foundation of Nnp with Non-Constant Interest Rates: Comment to Sefton and Weale

Center for Economic Studies Working Paper at University of Munich, Number 75

Posted: 2 Oct 1999

See all articles by Geir B. Asheim

Geir B. Asheim

University of Oslo - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 1994

Abstract

Weitzman shows that capital gains should be excluded from NNP. This result is somewhat deceptive since, with his assumption of a constant interest rate, there are no aggregate capital gains, while capital gains in each open economy should be included fully. Here, the implications of Weitzman welfare foundation is explored in the case of non- constant interest rates, a case often encountered in resource models. It is established that the conventional measure of NNP must be adjusted for capital gains and interest rate effects. This result is of importance for the distribution of NNP between resource rich and resource poor countries.

JEL Classification: E43

Suggested Citation

Asheim, Geir B., The Weitzman Foundation of Nnp with Non-Constant Interest Rates: Comment to Sefton and Weale (December 1994). Center for Economic Studies Working Paper at University of Munich, Number 75, Available at SSRN: https://ssrn.com/abstract=6034

Geir B. Asheim (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway
+47-2285 5498 (Phone)
+47-2285 5035 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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