Umeå Economic Studies
No 826: Genuine Saving and the Social Cost of Taxation
Thomas Aronsson (thomas.aronsson@econ.umu.se), Catia Cialani (catia.cialani@econ.umu.se) and Karl-Gustaf Löfgren (karl-gustaf.lofgren@econ.umu.se)
Abstract:
Following the 1987 report by The World Commission on Environment and Development, the genuine saving has come to play a key role in the context of sustainable development, and the World Bank regularly publishes numbers for genuine saving on a national basis. However, these numbers are typically calculated as if the tax system is non-distortionary. This paper presents an analogue to genuine saving in a second best economy, where the government raises revenue by means of distortionary taxation. We show how the social cost of public debt, which depends on the marginal excess burden, ought to be reflected in the genuine saving. By presenting calculations for Greece, Japan, Portugal, U.K., U.S. and OECD-average, we also show that the numbers published by the World Bank are likely to be biased and may even give incorrect information as to whether the economy is locally sustainable.
Keywords: Welfare change, investment, saving, taxation
JEL-Codes: D60, H21, I31, Q56
15 pages, Tuesday, May 17, 2011
Before downloading an electronic version below you should read the following statement on copyright.
Download Acrobat Reader for viewing and printing pdf files.
Full text version of the paper:
ues826.pdf Acrobat pdf file (175 kB)
[Home Page for Current Series] [Department of Economics, Umeå universitet]
[The S-WoPEc Working Paper Collection]
This page was generated on Tuesday, May 17, 2011
Report problems with accessing this service to webmaster@econ.umu.se
