Money Metrics Welfare Measures in Imperfect Markets under Growth

This paper shows how utility based welfare measures in dynamic general equilibrium under imperfect markets can be transferred into a money metrics. We need to price forward looking components measured in units of utility. The typical comprehensive quasi-static welfare measure will contain a core that looks like a comprehensive (green) NNP component, additional consumer surplus terms for both consumption goods and the externality, and in addition a forward looking component with the discounted marginal externality as the function to be integrated over time. To accomplish this we need a price index that is independent of the market basket, or assume that the marginal utility of income is constant over time. With respect to local welfare measures growth in traditional NNP will surprisingly work, provided that we condition on a positive average marginal rate of return of investment and an augmented genuine saving concept