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Welfare vs. Income Convergence and Environmental Externalities
Author:
Mr. Geoffrey J Bannister
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Mr. Alex Mourmouras
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Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 271
Language:
English
Publication Date:
07 Dec 2017
DOI:
https://doi.org/10.5089/9781484331514.001
ISBN:
9781484331514
ISSN:
1018-5941
Pages:
32
Keywords:
WP; life expectancy; per capita income; financial crisis; natural resources; Welfare; convergence; income; environment; externalities; income country; income share; log ratio; reference country; Consumption; Greenhouse gas emissions; Income inequality; Asia and Pacific; Global; Europe; North America; Middle East
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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.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund