Monetary and Fiscal Policies for a Finite Planet
AbstractCurrent macroeconomic policy promotes continuous economic growth. Unemployment, poverty and debt are associated with insufficient growth. Economic activity depends upon the transformation of natural materials, ultimately returning to the environment as waste. Current levels of economic throughput exceed the planet’s carrying capacity. As a result of poorly constructed economic institutions, society faces the unacceptable choice between ecological catastrophe and human misery. A transition to a steady-state economy is required, characterized by a rate of throughput compatible with planetary boundaries. This paper contributes to the development of a steady-state economy by addressing US monetary and fiscal policies. A steady-state monetary policy would support counter-cyclical, debt-free vertical money creation through the public sector, in ways that contribute to sustainable well-being. The implication for a steady-state fiscal policy is that any lending or spending requires a careful balance of recovery of money, not as a means of revenue, but as an economic imperative to meet monetary policy goals. A steady-state fiscal policy would prioritize targeted public goods investments, taxation of ecological “bads” and economic rent and implementation of progressive tax structures. Institutional innovations are considered, including common asset trusts, to regulate throughput, and a public monetary trust, to strictly regulate money supply.
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Bibliographic InfoArticle provided by MDPI, Open Access Journal in its journal Sustainability.
Volume (Year): 5 (2013)
Issue (Month): 6 (June)
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Web page: http://www.mdpi.com/
monetary; fiscal; public; policy; steady-state; ecological; biophysical; macroeconomics; money; debt;
Find related papers by JEL classification:
- Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
- Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
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- Ekins, Paul, 2003. "Identifying critical natural capital: Conclusions about critical natural capital," Ecological Economics, Elsevier, vol. 44(2-3), pages 277-292, March.
- Malghan, Deepak, 2011. "A dimensionally consistent aggregation framework for biophysical metrics," Ecological Economics, Elsevier, vol. 70(5), pages 900-909, March.
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