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Integrating Ecological, Productive, and Macrofinancial Spheres with ESTEEM: A System Dynamics Framework to Assess Brazil’s Transformation Plan

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  • Magacho, Guilherme
  • Spinola, Danilo

Abstract

This paper presents a continuous-time behavioural ecological macroeconomic model grounded in the dynamic input–output (IO) framework, named ESTEEM, and applies it to the Brazilian economy. The model is calibrated using Brazil’s IO matrix, and its primary goal is to serve as a policy and scenario-building toolbox, illustrated here through the Brazilian Economic Transformation Plan (Plano de Transformação Ecológica), announced at COP28 in 2023. Tailored for open developing economies, the model extends traditional IO analysis by integrating dynamic feedback loops, sectoral investment behaviour, inventory dynamics, wage and price formation, environmental pressures and constraints, and a range of policy instruments. Combining structuralist foundations with system dynamics, ESTEEM captures both short-term disequilibrium and long-term development paths, allowing simulations of industrial policy, fiscal and monetary interventions, structural change, and ecological transitions. Key innovations include the endogenisation of capital accumulation, adaptive expectations, and green technological change.

Suggested Citation

  • Magacho, Guilherme & Spinola, Danilo, 2025. "Integrating Ecological, Productive, and Macrofinancial Spheres with ESTEEM: A System Dynamics Framework to Assess Brazil’s Transformation Plan," CAFE Working Papers 38, Centre for Accountancy, Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University.
    • Handle: RePEc:akf:cafewp:38
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