Directed Technological Change in a Post-Keynesian Ecological Macromodel

Abstract

This paper presents a post-Keynesian ecological macro model that combines three strands of literature: the directed technological change mechanism developed in mainstream endogenous growth theory models, the ecological economic literature which highlights the role of green innovation and material flows, and the post-Keynesian school which provides a framework to deal with the demand side of the economy, financial flows, and inter-and intra-sectoral behavioral interactions. The model is stock-flow consistent and introduces research and development (R&D) as a component of GDP funded by private firm investment and public expenditure. The economy uses three complimentary inputs -Labor, Capital, and (non-renewable) Resources. Input productivities depend on R&D expenditures, which are determined by relative changes in their respective prices. Two policy experiments are tested; a Resource tax increase, and an increase in the share of public R&D on Resources. Model results show that policy instruments that are continually increased over a long-time horizon have better chances of achieving a "green" transition than one-off climate policy shocks to the system, that primarily have a short-run affect.

Three green financial policies to address climate risks

“…While sticking to aggregate modelling, also scholars form the stock-flow consistent (SFC) tradition have contributed to the analysis of low-carbon transitions (Dafermos et al, 2017;Monasterolo and Raberto, 2018;Naqvi and Stockhammer, 2018;Carnevali et al, 2020), enhancing our understanding of the macrofinancial consequences of resource use, environmental depletion and movements in labour productivity and energy intensity (Rezai and Stagl, 2016). Notwithstanding fundamental differences in the modelling philosophy, it is worth stressing that both the agent-based and ecological macroeconomic literatures have historically adopted a dis-equilibrium interpretation of economic dynamics, with large emphasis on the role of innovation, investment and credit provision as destabilising yet fundamental ingredients of economic change.…”

The Double Materiality of Climate Physical and Transition Risks in the Euro Area

“…• The conditions for and impact of carbon pricing on the transition (Dafermos et al, 2017;Stolbova et al, 2018;Naqvi and Stockhammer, 2018;Bovari et al, 2018b);…”

An Empirical Stock-Flow Consistent Macroeconomic Model for Denmark

“…4 See Caverzasi and Godin (2014), , and Nikiforos and Zezza (2017) for comprehensive surveys on the SFC approach to modeling. 5 See, e.g., Dafermos, Nikolaidi, and Galanis (2017), Ponta et al (2018), Bovari, Giraud, and Mc Isaac (2018), and Naqvi and Stockhammer (2018).…”