Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Modelling the Great Transition Emanuele Campiglio James Meadway Istanbul – ESEE Conference - 2011 nef Great Transition Initiative • Towards a new economic system: • Widespread wellbeing • Environmental sustainability (energy, climate) • Fair distribution of wealth • But: How to get there? • We need: 1. Policy analysis tools 2. Appropriate economic theory We need a model! Starting reference • Peter Victor’s LOWGROW Model (2008) • Macroeconomic model of the Canadian Economy • System dynamics methodology • Main result: using the right policies, it could be possible to have a high employment sustainable economy without growth. • Main policies: 1. 2. Carbon taxation Work time reduction A good low-growth scenario What next? 1. Other countries’ application (UK, US, Italy, Austria, New Zealand..) 2. Economic theory refinement and expansion: – – – – – – Money Banking system Endogenous technical change Energy sector Climate change economics Rest of the world (trade, migration..) 3. Methodology refinement (system dynamics literature) The Great Transition model • Research question: How to manage the UK economy within environmental limits whilst delivering increasing wellbeing? • Research process: 1. Build a macroeconomic model of the UK economy • System dynamics methodology • Core economic model • Environmental limits; Finance; Wellbeing; Technical change; … • Data collection; functions estimation; calibration 2. Policy testing 3. Introduce microeconomic behaviour consumption / work / investment choices) (endogenous Main references • • • • • • • Peter Victor’s LOWGROW Yamaguchi’s Macroeconomic dynamics David Wheat’s Macrolab Tom Fiddaman’s FREE Millennium Institute’s T21 Neoclassical models: Dice/Rice, Witch Growth theory The core model 1 Y= min (aggr. demand, inventory) Y min (Desired full GDP) AK L capacity Y output, C Ioutput+ G Production in LowGrow Population dynamics Labor force * * Y ˆ L* ˆ F (Work.Pop* SR / w F)/adj.time L (L F part.ratioL) /adj.time Capital stock * * ˆ K (K K (1K) )YLR*/adj.time /(i ) Consumption sector * ˆ *(C C cBanking sector f (i, p,..) C cY C)d /adj.time 0 Government Next steps • Complete the core model: – Prices, interest rate, wages – Banking system, finance, money creation – Government revenues and expenditures • Insert environmental limits: – Energy sector – Climate change Energy sector sketch Next steps • Complete the core model: – Prices, interest rate, wages – Banking system, finance, money creation – Government revenues and expenditures • Insert environmental limits: – Energy sector – Climate change (damage function?) • Calibrate the model Numerical simulations: – What mix of policies is needed? – How to finance the transition? Thanks! www.neweconomics.org [email protected] [email protected]