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The economic and financial dimensions of degrowth

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  • Tokic, Damir

Abstract

We respond to the call for future research on degrowth and specifically analyze the implications of economic degrowth on the monetary and financial system. We argue that any early indications of degrowth would cause the stock market to crash, which would trigger further deleveraging (contagion) and a deflation. As a result, the economy would implode, which would eventually allow for a new rapid growth cycle, given the likely extraordinary fiscal and monetary policy response during the implosion. Thus, in our view, degrowth as an explicit strategy option is economically unsustainable and unfeasible. As a limitation, our analysis centers on the examples of unplanned crisis leading to an economic implosion, which imperfectly represent the idea of planned/voluntary degrowth.

Suggested Citation

  • Tokic, Damir, 2012. "The economic and financial dimensions of degrowth," Ecological Economics, Elsevier, vol. 84(C), pages 49-56.
  • Handle: RePEc:eee:ecolec:v:84:y:2012:i:c:p:49-56
    DOI: 10.1016/j.ecolecon.2012.09.011
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    Cited by:

    1. Málovics, György & Dombi, Judit, 2015. "A növekedésen túl - egy új irányzat hozzájárulása a fenntarthatósági vitához
      [Beyond growth - the contribution of a new direction to the debate on sustainability]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 200-221.
    2. Malmaeus, J. Mikael & Alfredsson, Eva C., 2017. "Potential Consequences on the Economy of Low or No Growth - Short and Long Term Perspectives," Ecological Economics, Elsevier, vol. 134(C), pages 57-64.
    3. repec:eee:ecolec:v:156:y:2019:i:c:p:327-336 is not listed on IDEAS
    4. Richters, Oliver, 2015. "Integrating Energy Use into Macroeconomic Stock-Flow Consistent Models," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 154764, June.

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    Keywords

    Degrowth; Stock market; Deflation; Deleveraging;

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