Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework. Policy Paper no 18

Naqvi, Asjad (2015) Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework. Policy Paper no 18. WWWforEurope. European Commission, bmwfw, Vienna.

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Economic policy in the EU faces a trilemma of solving three challenges simultaneously - growth, distribution, and the environment. In order to assess policies that address these issues simultaneously, economic models need to account for both sector-sector and sector-environment feedbacks within a single framework.This paper presents a multi-sectoral stock-flow consistent (SFC) macro model where a demand-driven economy consisting of multiple institutional sectors - firms, energy, households, government, and financial - interacts with the environment. The model is calibrated for the EU region and five policy scenarios are evaluated; low consumption, a capital stock damage function, carbon taxes, higher share of renewable energy, and technological shocks to productivity. Policy outcomes are tracked on overall output, unemployment, income and income distributions, energy, and emission levels. Results show that investment in mitigation technologies allows for absolute decoupling and ensures that the above three issues can be solved simultaneously.

Item Type: Paper
Additional Information: This research is supported by the EU FP7 grant titled WWWforEurope (290647). Earlier versions of this paper greatly benefited from feedback provided by Rudi von Arnim, Jeroen van den Bergh, Duncan Foley, Antoine Godin, Tim Jackson, Stephen Kinsella, Kurt Kratena, Miriam Rehm, Malcolm Sawyer, Sigrid Stagl, Klara Zwickl, participants at the WIFO Modeling Workshop, the University of Limerick Environmental Modeling Workshop, and the AK Wien, FMM, and the EAEPE conferences. All errors are my own.
Keywords: ecological macroeconomics / stock-flow consistent / growth / distribution / environment / European Union
Classification Codes: JEL E12, E17, E23, E24, Q52, Q56
Divisions: Departments > Sozioökonomie
Depositing User: Elena Simukovic
Date Deposited: 26 Nov 2015 15:19
Last Modified: 24 Jun 2019 12:36

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