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Lecture

Basics 2: Capital and Saving

In course

HUM-471: Economic growth and sustainability I

This course examines growth from various angles: economic growth, growth in the use of resources, need for growth, limits to growth, sustainable growth, population growth. Although grounded in economics, it takes up elements from many other disciplines. ...

Description

This lecture introduces the law of motion of capital, covering financial, manufactured, human, and natural capital, as well as saving, investment, and consumption. It explains three methods for estimating a capital stock, including the conditions for a growing capital stock and a capital stock growing at a desired rate.

Instructor

Philippe Thalmann

Philippe Thalmann was born in Lausanne in 1963. He graduated in Economics from the University of Lausanne in 1984, where he earned a postgraduate diploma in Economics in 1986. Mr. Thalmann entered the doctoral program in Economics of Harvard University (Cambridge, U.S.A.) in 1986, which he completed with a Ph.D. in 1990. His dissertation is entitled: "Essays in the Economics of Government Revenues and Spending". Returning to Switzerland, he was hired as an assistant professor first at the University of Geneva (teachings in Public Economics), then at the University of Lausanne (teachings in Econometrics and Introductory Economics). Since 1994, Mr. Thalmann is associate professor of Economics as the Swiss Federal Institute of Technology at Lausanne.

Official source

Related concepts (32)

Population growth

Population growth is the increase in the number of people in a population or dispersed group. Actual global human population growth amounts to around 83 million annually, or 1.1% per year. The global population has grown from 1 billion in 1800 to 7.9 billion in 2020. The UN projected population to keep growing, and estimates have put the total population at 8.6 billion by mid-2030, 9.8 billion by mid-2050 and 11.2 billion by 2100.

Saving

Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in, for example, a deposit account, a pension account, an investment fund, or as cash. Saving also involves reducing expenditures, such as recurring costs. In terms of personal finance, saving generally specifies low-risk preservation of money, as in a deposit account, versus investment, wherein risk is a lot higher; in economics more broadly, it refers to any income not used for immediate consumption.

Capital gain

Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. A capital gain is only possible when the selling price of the asset is greater than the original purchase price. In the event that the purchase price exceeds the sale price, a capital loss occurs. Capital gains are often subject to taxation, of which rates and exemptions may differ between countries.

Stock

Stock (also capital stock, or sometimes interchangeably, shares) consist of all the shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the shareholder (stockholder) to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all senior claims such as secured and unsecured debt), or voting power, often dividing these up in proportion to the amount of money each stockholder has invested.

Economic growth

Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of increase in the real and nominal gross domestic product (GDP). Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate the distorting effect of inflation on the prices of goods produced. Measurement of economic growth uses national income accounting.

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Basics 2: Capital & Saving

Covers the basics of capital and saving, including the relationship between saving and investment.

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Economic Growth: Measuring Total Production and Value Added

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Understanding IPAT Formula

Explores the IPAT formula, analyzing environmental impact factors like population, affluence, and technology, and discusses strategies for meeting CO₂ emissions targets.

Capital Accumulation and Investment