Welfare vs. Income Convergence and Environmental Externalities

By Geoffrey J Bannister, Alex Mourmouras

December 7, 2017

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Format: Chicago

Geoffrey J Bannister, and Alex Mourmouras. Welfare vs. Income Convergence and Environmental Externalities, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We present estimates of welfare by country for 2007 and 2014 using the methodology of Jones and Klenow (2016) which incorporates consumption, leisure, mortality and inequality, and we extend the methodology to include environmental externalities. During the period of the global financial crisis welfare grew slightly more rapidly than income per capita, mainly due to improvements in life expectancy. This led to welfare convergence in most regions towards advanced country levels. Introducing environmental effects changes the welfare ranking for countries that rely heavily on natural resources, highlighting the importance of the natural resource base in welfare. This methodology could provide a theoretically consistent and tractable way of monitoring progress in several Sustainable Development Goal (SDG) indicators.

Subject: Consumption, Environment, Greenhouse gas emissions, Health, Income, Income inequality, National accounts

Keywords: Asia and Pacific, Consumption, Convergence, Environment, Europe, Externalities, Financial crisis, Global, Greenhouse gas emissions, Income, Income country, Income inequality, Income share, Life expectancy, Log ratio, Middle East, Natural resources, North America, Per capita income, Reference country, Welfare, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/271
Stock No:

WPIEA2017271
ISBN:

9781484331514
ISSN:

1018-5941

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