environmental regulation and u s economic growth in this article we quantify the costs of pollution controls by reporting the results of simulations of the growth of the u s economy with and without regulation for this purpose we have constructed a detailed model of the economy that includes the determinants of long term growth we have also analyzed the interaction between industries in order to capture the full repercussions of environmental regulations however we have not attempted to assess the benefits resulting from a cleaner environment we find that pollution abatement has emerged as a major claimant on the resources of the u s economy the cost of emission controls is more than 10 of the total cost of government purchases of goods and services

approximate efficiency of cournot equilibria in large markets this paper establishes necessary and sufficient conditions for the approximate efficiency of cournot equilibria in large markets the analysis is carried out in the partial equilibrium framework of a market for a homogeneous commodity

evolution of population resource dynamics models abstract this paper provides a comprehensive analysis of brander and taylor s 1998 model and its descendants from the following perspectives population growth substitutability innovation capital accumulation property rights and institutional designs and modeling approach this survey aims to contribute to a better understanding of population and resource dynamics models in general and facilitate further application of the model framework to relevant circumstances although often treated as exogenous in optimal growth models making population growth an endogenous function allows us to analyze broader effects of economic activities on population the issues of substitutability innovation and capital accumulation are intertwined allowing a model to address the effect of an endogenous technological change on substitutability between natural and man made capital facilitates our analyses of sustainability issues to address internalizing inter generational externalities in resource use incorporating property right changes and institutional designs to this type of model is a useful exercise but careful attention is needed for the consistency between such an arrangement and the mathematical representation of the depicted economy finally although the common criticism regarding convenient mathematical assumptions applies to the existing bt type models the use of computer simulation can relax such assumptions to better represent the intended relationships between the relevant variables

a biophysical analysis of the energy real gdp ratio implications for substitution and technical change abstract this paper quantifies the factors that caused the energy real gdp ratio to change during the post war period in france the federal republic of germany japan and the united kingdom econometric results indicate that changes in the types of fuel used changes in the energy consumed by the household sector changes in the types of goods and services produced and changes in energy prices account for most of the variation in this ratio price elasticities estimated from these results are lower than those estimated by neoclassical economists and indicate that the system boundaries used by neoclassical economists overestimate the amount of energy saved by substitution analysis of the error term from the regression results indicates that energy saving technical change has had little effect on the amount of energy used to support economic activity

toward a neoclassical theory of sustainable consumption eight golden age propositions abstract popular trends in ecological economics increasingly consign neoclassical economics to the sidelines of modern day relevancy the neoclassical tradition is often seen as reliant for its authenticity on a presumption of human avarice both unbridled consumerism and corporate cupidity and demanding for its real world applicability an assumption of continuous economic growth in a world of hard limits this article examines the question of whether neoclassical theory could instead provide keys to deeper understanding of sustainable consumption by combining in a single framework neoclassical growth theory general equilibrium theory and duality theory and by explicitly considering leisure time the analysis demonstrates that neoclassical economics yields several useful insights bearing on long term sustainability the analysis confirms several tenets of ecological economics and challenges others eight propositions emerge from this analysis that could help speed the development of a robust neoclassical theory of sustainable consumption here branded golden age propositions as they strongly echo the golden rule discoveries of edmund phelps

environmental regulations and productivity growth the case of fossil fueled electric power generation this paper measures and analyzes the effect of sulfur dioxide emission restrictions on the rate of productivity growth in the electric power industry over the 1973 79 business cycle a firm specific measure of regulatory intensity is developed which depends on the severity of the emission standard the extent of enforcement and the unconstrained emission rate relevant to each utility the results indicate that emission regulations result in significantly higher generating costs primarily from the increased use of low sulfur fuels the average rate of productivity growth was reduced by 0 59 percentage points per year for constrained utilities

is the entropy law relevant to the economics of natural resource scarcity comment abstract jeffrey t young s critique of the work of nicholas georgescu roegen and herman e daly questions the relevance of the entropy law for economic analysis and provides a concise faithful summary of the positions of georgescu roegen and daly along the way however young produces an alternative model of natural resource depletion that is based upon questionable interpretations of the laws of thermodynamics in particular young s claim that natural resource economics can be divided into conservation law orientations and entropy law orientations and his claim that the entropy law pertains to energy but not to matter seem unsupportable from a scientific view

environmental policy and competitiveness the porter hypothesis and the composition of capital abstract the porter hypothesis suggests a win win situation in the sense that environmental policy improves both environment and competitiveness the suggestion received strong criticism from economists driven by the idea that if opportunities exist firms do not have to be triggered by an extra cost in this paper a model is developed which confirms this point but which also draws attention to some general mechanisms that relax the trade off considerably downsizing and modernization of firms subject to environmental policy will increase average productivity and will have positive effects on the marginal decrease of profits and environmental damage

the contribution of environmental regulations to the slowdown in productivity growth abstract the radical slowdown in productivity growth since 1965 is often attributed to environmental regulations several studies varying widely in method have attempted to assess this contribution here these analyses are reviewed and critiqued and a summary appraisal of the likely contribution of environmental regulations to the observed decrease in productivity growth is offered

entropy and natural resource scarcity a reply to the critics abstract the paper reaffirms the author s view that entropy is not relevant to the economics of natural resource scarcity once system boundaries are carefully defined entropic considerations are either already incorporated into relative price information or represent such a long run constraint as to be irrelevant to foreseeable human welfare while matter and energy both undergo entropic dissipation it is argued there is an asymmetry in that energy can be imported to recycle matter but the converse importing matter to recycle energy is pure science fiction therefore an open system such as the earth can maintain any level of organization

non linear dynamics of population and natural resources the emergence of different patterns of development abstract this paper studies the long term dynamic interaction between the exploitation of natural resources and population growth brander and taylor brander j a and taylor m s 1998 the simple economics of easter island a ricardo malthus model of renewable resource use american economic review 88 1 119 138 started a sequence of papers which sought to deduce from historical and archaeological studies some stylized links between ecological and economic systems in this strand of literature all the services of the natural environment are aggregated in an ecological complex which is characterized by a simple logistic dynamics given such assumptions these models show a unique long term steady state the aim of this paper is to obtain a more general framework that could account for the heterogeneity of environmental development paths followed by past societies two new assumptions are introduced i the disaggregation of the ecological complex into two different resources ii irreversibility namely an inexorable tendency to exhaustion when the renewable resource stock is below a certain threshold analysis of the dynamic properties of the system shows a multiplicity of steady states which makes it possible to consider the effects of technical progress cultural and climate changes on the resilience of the existing development path

environmental constraints and sigmoid utility implications for value risk sensitivity and social status abstract friedman and savage journal of political economy 4 1948 279 proposed sigmoid utility theory to model the relationship between social class and risk sensitivity their proposal has not been explicitly modeled to allow for full testing of the concept we argue that sigmoid utility arises naturally from boundary conditions imposed by finite environmental resources that engender competition we also present a sigmoid formulation and examine its empirical warrant by considering economic data from anthropological historical and sociological cases studies standard risk sensitivity measures such as arrow pratt and downside risk aversion provide expectations for which individuals are most risk prone insights from prospect theory indicate under what conditions sigmoid utility may be most useful we consider the implications of environmental constraint in the context of the sigmoid model as an explanation for the nature of political turmoil during the collapse of maya civilization ca ad 850 we consider the role lack of constraint played in the american revolution and we explore how sigmoid utility can enrich our understanding of contemporary american voting behavior

the concept of weak sustainability abstract this paper surveys the links between growth theory with exhaustible resources and the concept of weak sustainability it examines the underlying assumptions behind this concept and questions the usefulness of the weak sustainability index as an indicator of sustainable development

optimal environmental taxes and standards implications of the materials balance abstract this paper investigates the implications of the materials balance for optimal environmental policy we find that neglecting the materials emissions relationship as is common in models of optimal environmental regulation implies biases whose sign depends on the regulatory instrument chosen when emissions are regulated through an emission tax the seemingly optimal tax is too high when regulation proceeds through the use of an emission standard the seemingly optimal standard is too lax

impacts of market based climate change policies on the us pulp and paper industry abstract much of the policy debates on climate issues have centered on the optimal level and timing of policy interventions that cost effectively reduce greenhouse gas emissions we briefly review the range of policy issues in our paper and assess the impact that climate change policies may have on energy use and carbon emissions in the us pulp and paper industry we then present results from time series based analyses of changes in technologies and fuel mix and compare the results with engineering based technology analyses of us pulp and paper production for a copy of the model and software send e mail to mruth bu edu projections based on information for eight paper and paperboard categories are presented for the years 1995 2020 the findings indicate that under a wide range of specifications and policy assumptions carbon emissions from fossil fuel use per ton of product are likely to decline when combined with investment incentives an additional cost effective reduction in carbon emissions per ton of product will be realized however expected increases in output from the industry are likely to be higher than the reductions in energy and carbon intensities the policy implications of these findings are discussed

justifying the incorporation of the materials balance principle into frontier based eco efficiency models frontier based models are an alternative to traditional eco efficiency ratio indicators this paper considers two different types environmentally adjusted production efficiency models and frontier eco efficiency models and tries to find justification for incorporating the materials balance principle mbp in them similar importance is attached to the economic and environmental outcomes of a production process like economic outcomes can be derived from inputs and outputs and respective prices some cases allow for deriving environmental outcomes from the production function with the mbp after an overview of attempts to incorporate environmental issues in production efficiency models and some reflections why mbp has been neglected in environmental economics and production efficiency analysis the paper gives basic principles to incorporate the mbp in conventional production efficiency methods and shows how this adjustment leads to a more diversified diagnosis of eco efficiency finally potentialities and bottlenecks are discussed exploiting the mbp in production efficiency and eco efficiency analysis will facilitate more pro active eco efficiency research

material flows vs natural capital what makes an economy sustainable abstract in the discourse about sustainable development constant natural capital is frequently referred to as a criterion for ecological sustainability but what is natural capital the concept will be analyzed by presenting arguments in favour of using the term and different versions of sustainability strong and weak subsequently a critique of the natural capital concept is brought forward from an ecological as well as from an economic perspective following this critique the use of material inputs and the material input per unit of service mips as a measure for the environmental impact potential is suggested dematerialisation is understood to be an alternative management rule for sustainability in conclusion a change of perspective is proposed due to the conceptual and measurement problems associated with the constant natural capital criterion which refers to a stock it seems more reasonable from a scientific as well as from a practical perspective to add flows i e material inputs to a decision criterion for whether a development is sustainable or not

is the entropy law relevant to the economics of natural resource scarcity abstract nicholas georgescu roegen and herman daly have argued that the entropy law imposes an absolute resource scarcity which cannot be overcome with technological change exploration or substitution on the contrary this paper argues that their critique is fundamentally flawed the pessimistic scenario requires a concept of materials entropy which is highly problematic materials entropy cannot be defined independently of technology and it is impossible to aggregate over different types of materials to meaningfully talk about available versus unavailable matter in the aggregate failing a concept of materials entropy the critique fails since the earth is not closed with respect to energy

the neoclassical trojan horse of steady state economics the vision of a steady state economy elaborated by herman daly describes an economy that uses materials and energy within the regenerative and assimilative limits of the planet s ecosystems sustainable scale just distribution and efficient allocation are its constitutive theoretical goals this paper is a critique of the theoretical foundations of steady state economics it argues that steady state economics consists in an attempt to squeeze neoclassical economics into a biophysical and ethical corset as a result many fundamental flaws and criticisms of neoclassical economics remain as a consequence steady state economics does not lead to a radical departure from or improvement upon neoclassical theory but rather to fundamental internal inconsistencies between the old economics paradigm and new progressive ecological economic thinking contradictions appear at various levels ranging from ontology and methodology to theory and values as daly has pioneered the foundations of ecological economics with his thinking these ambiguities are not only problematic for steady state economics but ecological economics as a field more generally the paper concludes that ecological economics has to let go of neoclassical foundations as they contradict its core values and ambitions a new and consistent theory of political economy of the environment along heterodox lines is needed

mixed forests and finance methodological approaches abstract mixed forest ecosystems show effects of risk compensation similar to diversified portfolios of stocks other than portfolios of stocks the composition of long lived forests cannot be adjusted at short notice to current market developments thus the financial robustness of tree species portfolios is very important however it is still an open question which financial approaches are appropriate to evaluate the financial robustness of mixed forests compared to single species forests this paper analysed various possibilities to assess portfolios of tree species namely the mean variance mv approach applied for the selection of optimal portfolios the second order stochastic dominance ssd criterion and the information gap approach for the numerical analysis existing financial data on norway spruce picea abies l karst and european beech fagus sylvatica l were used which were generated by monte carlo simulations mcs under risk regardless of the analysed approach in all cases pure forests did not outperform mixed forests the mv approach was restricted by the assumption of normally distributed financial returns it had the tendency to favour larger proportions of the high risk species norway spruce ssd was only able to distinguish between the efficient and the inefficient portfolios it showed that forests with less than 20 financial returns generated by mcs or less than 30 normally distributed financial returns of norway spruce were inefficient under information gap modelling the advantages of risk compensation in mixed forests became clearest under the given assumptions the financial robustness of a mixed forest 50 european beech and 50 norway spruce was between 4 and 18 times greater than that of pure norway spruce modern information gap modelling is very similar to the well known safety first rules and as such it is not that novel to financial optimisation as it seems at the first glance although the information gap theory resulted in the same rankings as the minimisation of the estimated probability of failure it nevertheless proved to be useful as a supplement to the other methods against the background of severe uncertainty inherent in long term decision making in forestry information gap modelling is based on appropriate assumptions it favours a decision which promises the greatest tolerance to possible errors in the available information while still guaranteeing a minimal acceptable financial result in principle classical safety first rules do the same however the information gap model is able to quantify the immunity of a decision against errors in the estimated financial data from a theoretical point of view this approach provides a supplementary and methodologically sound opportunity to incorporate severe uncertainty in decision making

on the presence and absence of free entry in oligopoly equilibria abstract this note provides sufficient conditions for the presence and absence of free entry at cournot equilibria and some other oligopoly equilibria in a market for a homogeneous commodity

multilateral productivity comparisons with undesirable outputs in a recent paper in this journal caves christensen and diewert i982 hereafter ccd derive what they term multilateral superlative indexes for use in the comparison of output input and productivity across economic entities the indexes derived are distinguished both by transitivity and by a high degree of characteristicity a term introduced by dreschler i 973 to refer to the degree to which the weights used in a comparison are specific to the observations being compared though the indexes are presented with the application to multicountry comparisons of output input and productivity foremost in mind the authors note that they may be useful in a number of other contexts as well i e firms and industries time series and pooled time series and cross section all of the applications mentioned or implied however have this in common they involve the comparison of productive entities all of whose outputs are sold for positive prices this is not surprising of course since most products with which economists are concerned possess this characteristic however it does render incomplete or potentially misleading the comparison of productive entities which produce significant amounts of undesirable outputs such as water and air pollution since the list of such entities is rather long and includes industries critical to many national and regional economies e g chemicals paper petroleum refining copper and steel the omission of this factor from consideration may be a matter of some importance 2 consider for example a comparison of the productivity of the steel industries

financial literacy and mortgage equity withdrawals abstract mortgage equity withdrawals mew are correlated with covariates consistent with a permanent income framework augmented for credit constraints we assess linkages between mew and financial literacy education using the health and retirement study hrs and panel study of income dynamics psid we find that the financially literate are 3 5 percentage points less likely to withdraw housing equity via non home equity loan mortgages using the hrs while college graduates are 5 percentage points less likely than those without a high school degree in the psid among those withdrawing housing equity in the psid college graduates extract significantly less equity and are less likely to have high levels of housing leverage after doing so

non linear production abatement pollution and materials balance reconsidered abstract in the environmental economics literature the standard approach of modeling non linear production and abatement processes is to treat waste emissions simply as another factor of production cropper and oates j econ lit 30 1992 675 740 that approach does not map the materials flow involved completely and hides moreover the exact links between production residuals generation and abatement this paper shows that production functions with emissions treated as inputs can be reconstructed as a subsystem of a comprehensive production cum abatement technology that is in line with the materials balance principle in a simple economy with full regard of the materials flow it also explores the consequences for allocative efficiency and efficiency restoring taxation of multiple and interdependent residuals generated in the transformation processes of production abatement and consumption finally the paper demonstrates that efficiency may require setting the emissions tax rate above or below conventionally defined marginal abatement cost if the residual subject to abatement is not the only residual causing pollution

resistance to reform status quo bias in the presence of individual specific uncertainty comment why do governments so often fail to adopt policies which economists consider to be efficiency enhancing our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform we show that there is a bias towards the status quo and hence against efficiency enhancing reforms whenever some of the individual gainers and losers from reform cannot be identified beforehand there are reforms which once adopted will receive adequate political support but would have failed to carry the day ex ante the argument does not rely on risk aversion irrationality or hysteresis due to sunk costs jel d72 f13 why do governments so often fail to adopt policies that economists consider to be efficiency enhancing this is one of the fundamental questions of political economy the answer usually relies on what may be

thermodynamics and process analysis for future economic scenarios economists are increasingly interested in forecasting future costs and benefits of policies for dealing with materials energy fluxes polluting emissions and environmental impacts on various scales from sectoral to global computable general equilibrium cge models are currently popular because they project demand and industrial structure into the future along an equilibrium path but they are applicable only to the extent that structural changes occur in or near equilibrium independent of radical technological or social change the alternative tool for analyzing economic implications of scenario assumptions is to use leontief type input output i o models i o models are unable to endogenize structural shifts changing i o coefficients however this can be a virtue when considering radical rather than incremental shifts postulated i o tables can be used independently to check the internal consistency of scenarios or i o models can be used to generate scenarios by linking them to econometric macro drivers which can in principle be cge models explicit process analysis can be integrated in principle with i o models this hybrid scheme provides a natural means of satisfying physical constraints especially the first and second laws of thermodynamics this is important to avoid constructing scenarios based on physically impossible processes process analysis is really the only available tool for constructing physically plausible alternative future i o tables and generating materials energy and waste emissions coefficients explicit process analysis also helps avoid several problems characteristic of pure cge or i o models viz 1 aggregation errors 2 inability to handle arbitrary combinations of co product and co input relationships and 3 inability to reflect certain non linearities such as internal feedback loops

the extraction of natural resources the role of thermodynamic efficiency abstract the modelling of production in microeconomics has been the subject of heated debate the controversial issues include the substitutability between production inputs the role of time and the economic consequences of irreversibility in the production process a case in point is the use of cobb douglas type production functions which completely ignore the physical process underlying the production of a good we examine these issues in the context of the production of a basic commodity such as copper or aluminium we model the extraction and the refinement of a valuable substance which is mixed with waste material in a way which is fully consistent with the physical constraints of the process the resulting analytical description of production unambiguously reveals that perfect substitutability between production inputs fails if a corrected thermodynamic approach is used we analyze the equilibrium pricing of a commodity extracted in an irreversible way we force consumers to purchase goods using energy as the means of payment and force the firm to account in terms of energy the resulting market provides the firm with a form of reversibility of its use of energy under an energy numeraire energy resources will naturally be used in a more parsimonious way

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

environmental emissions and production economics implications of the materials balance in modeling emissions the literature has usually specified an explicit emission function or treated emissions as a production input we examine the validity of these approaches taking into account the materials balance principle we show that a technology can equivalently be described by i a production function with material and nonmaterial inputs and bounded marginal product of the material input ii a well behaved production function with emissions as an input and iii a well behaved emission function if the materials balance is accounted for as an additional condition we offer a forma derivation of common but not rigorously established modeling approaches

the effect of subsistence on collapse and institutional adaptation in population resource societies abstract we extend the brander taylor model of population and resource development in an isolated society by adding a resource subsistence requirement to people s preferences this improves plausibility amplifies population overshoot and collapse and can destabilize the steady state and allows for complete cessation of non harvesting activities in line with archaeological evidence for many societies we then use bifurcation techniques to give a global analysis of four types of institutional adaptation an ad valorem resource tax and quotas on total resource harvest total harvest effort and per capita effort in all cases we find that a higher subsistence requirement makes it harder or often impossible for adaptation to avoid overshoot and collapse

interactive dynamics between natural and man made assets the impact of external shocks abstract this paper studies a two sector economy in which one of the sectors the commodity sector depends in part on the exploitation of a renewable natural resource and examines the issue in an economy wide context where both natural resources and a man made asset change endogenously over time we show that under an open access resource regime i a resource rich capital poor economy may experience a natural resource curse phase and under certain conditions may even follow a non sustainable path leading to complete natural resource depletion ii a labor inflow results in a higher steady state per capita income with unchanged natural resources though it makes the economy more prone to reach a path that converges to resource collapse iii the introduction of a small import tariff or export tax results in larger steady state natural resources and commodity output and renders the economy less vulnerable to resource collapse we also contrast the open access case with the other polar case of perfect property rights showing that in this case the economy experiences neither a resource curse nor a resource collapse

capital theory and the measurement of sustainable development an indicator of weak sustainability the measurement of sustainable development is not without considerable difficulties yet this should not detract from the positive advances that can be made in this direction in this paper we present one form that a weak sustainability indicator can take derived from a simple but intuitive savings rule it incorporates the idea that the level of overall capital stock should be non decreasing although subject to qualification at this stage some interesting results emerge from the application of the rule to 18 countries

the economic importance of financial literacy theory and evidence this paper undertakes an assessment of a rapidly growing body of economic research on financial literacy we start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population next we draw on recent surveys to establish how much or how little people know and identify the least financially savvy population subgroups this is followed by an examination of the impact of financial literacy on economic decision making in the united states and elsewhere while the literature is still young conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps a final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy jel a20 d14 g11 i20 j26

employee financial literacy and retirement plan behavior a case study this article uses administrative data on all active employees of the federal reserve fr system to examine participation in and contributions to the thrift saving plan the system s defined contribution dc plan we link to administrative records a unique employee survey of economic demographic factors including a set of financial literacy questions not surprisingly fr employees are substantially more financially literate than the population at large most importantly financially savvy employees are also most likely to participate in their dc plan sophisticated workers contribute three percentage points more of their earnings to the dc plan than do the less knowledgeable and they hold more equity in their pension accounts we examine changes in employee plan behavior 1 year after employees completed a learning module about retirement planning and we compare it to baseline patterns we find that those employees who completed the learning module were more likely to start contributing and less likely to have stopped contributing to the dc plan postsurvey in sum employer provided learning programs are shown to significantly impact employee retirement saving decisions and consistent with a lot of other research higher levels of financial literacy are found to have a beneficial impact on retirement saving patterns jel j3 h7

production consumption and general equilibrium with physical constraints abstract this paper analyzes the consequences of integrating the conservation laws of mass and energy into the microeconomic models of production consumption and general equilibrium we show that abstract models and especially general equilibrium theory are consistent with these physical constraints but most applied and environmental economic models are not we analyze the consequences of physical conservation laws for substitution possibilities and show that these constraints limit the number of independent substitution processes but not the value of the substitution elasticities finally we propose a method for integrating physical constraints into static microeconomic models with a minimum of changes

finding common ground between ecological economics and post keynesian economics abstract post keynesian economics and ecological economics have in common that they are considered to be heterodox schools of thought aside from that there has not been a strong connection between them previous books on post keynesian economics contain no chapter on environmental or ecological issues this neglect has led leading ecological economists to criticize post keynesians for succumbing to the same growth paradigm as the neoclassical school this paper argues that the two approaches are complementary in the sense that they each have different strong points ecological economics has correctly pointed out that the growth of the global economy may not be welfare improving anymore whereas post keynesians have gained valuable insights into the functioning of the capitalist growth process to determine the feasibility of a synthesis between the two schools the paper compares their approaches to the problems of production consumption and economic dynamics as well as the associated policy recommendations it shows that on a theoretical level the two schools have much in common but their policy conclusions differ with regard to the desirability of further growth the paper concludes that a synthesis of both approaches may lead to a better understanding of how a capitalist economy operates in a natural environment with limits to growth and to better informed policy advice

sustainability and growth when manufactured capital and natural capital are not substitutable abstract a two sector neoclassical growth model of manufactured capital and natural capital is used in examining the importance of factor substitution to the issues of sustainability and economic growth analytical conclusions are established on the sustainability of the stocks of natural capital and manufactured capital as well as on the importance of factor substitution to the issues of technical progress and recycling policy and welfare implications of the analysis are also discussed

revocability and reversibility in societal decision making abstract reversibility and irreversibility are poorly defined in the decision making literature defining reversibility as the ability to maintain and to restore the functional performance of a system is consistent with thermodynamics specification of its crucial terms is case dependent reversibility is coming in degrees from flexibility over rigidity to preclusion with irreversibility as an absolute end further substantiating reversibility considers three variables duration of impacts revoking costs and substitutability substitutability depends on weights assigned to the strict identity or to the functional performance of something valued for given degrees of substitutability revocability of an action is measurable in time dependent revoking costs together with future time and doubt reversibility sets a three dimensional context for societal decision making revealing domes of expanding complexity cost benefit analysis is a useful decision tool at lower complexity but falters at high complexity because there prevail non monetary trade offs a revival and proper use of the concept reversibility are recommended for improved dialog on major societal issues with climate change outstanding as the case where reversibility could turn into absolute irreversibility also shown is the correspondence between reversibility and ecological concepts like resilience lock in tipping points and others

irreversibility and uncertainty cause an intergenerational equity efficiency trade off abstract two important policy goals in intergenerational problems are pareto efficiency and sustainability i e intergenerational equity we demonstrate that the pursuit of these goals is subject to an intergenerational equity efficiency trade off our analysis highlights two salient characteristics of intergenerational problems and policy i temporal irreversibility i e the inability to revise one s past actions and ii uncertainty of future consequences of present actions in human environment systems we employ a two non overlapping generations model that combines an intragenerational production decision on the use of circulating capital and a non renewable resource with a negative intergenerational externality as an unforeseen contingency if initially unknown problems become apparent and policy is enacted after irreversible actions were taken policy making faces a fundamental trade off between ex post pareto efficiency and sustainability that is one can achieve either one of these two goals but not both

the economic multiplier of environmental life support can capital substitute for a degraded environment abstract this paper analyzes the effects of environmental degradation on the long run growth path of an economy it seeks to answer the following question does the effect of environmental degradation on economic activity increase or decrease over time to answer this question i use a neoclassical growth model to calculate an environmental life support multiplier this multiplier compares the short and long run effects of environmental degradation on economic activity the value of the multiplier indicates that the effect of a reduction in environmental life support on economic activity increases by a factor of 2 3 over time such results indicate that it is not possible to substitute capital for environmental life support and maintain material well being

eco thermodynamics economics and the second law the laws of physics especially the first and second laws of thermodynamics have significant implications for economic theory the major implications of the first law conservation of mass energy are straightforward and have been discussed at length elsewhere in brief raw material inputs to economic processes are not consumed having been extracted from the environment in the first place they eventually return to the environment as wastes the economic implications of the second law entropy law are far more subtle there is considerable literature initiated by the work of georgescu roegen on the supposed constraints on economic growth imposed by the fact that economic processes utilize low entropy raw materials fossil fuels and high grade metal ores and discard high entropy wastes however as a practical matter the flux of available low entropy energy exergy from the sun is extremely large and certainly adequate to sustain economic activity in the solar system indefinitely even though fossil fuel and metal ore stocks may eventually be exhausted it is argued in this paper that the real economic significance of the second law lies in the fact that exergy is i not conserved and ii is a useful common measure of resource quality as well as quantity applicable to both materials and energy thus exergy can be used to measure and compare resource inputs and outputs including wastes and losses this is potentially important in itself moreover since exergy is not conserved it is truly consumed i e used up in economic processes hence exergy is no less a factor of production than labor or capital this fact has strong implications for economic growth theory especially with regard to assessing the role of technical progress

entropy and economic processes physics perspectives this paper is a contribution to the discussion on the relation between thermodynamics and economic theory with respect to thermodynamic constraints on the economy there are two diametrically opposite positions in this discussion one claims that the constraints are insignificant of no immediate practical importance for modelling and in the intermediate run do not limit economic activity and therefore need not be incorporated in the economic theory the other holds that thermodynamics tells us that there are practical limits to materials recycling which already puts bounds on the economy and therefore must be included in the economic models using the thermodynamic concept of entropy we show here that there are fundamental problems with both positions even in the long run entropy production associated with material dissipation need not be a limiting factor for economic development abundant energy resources from solar radiation may be used to recover dissipated elements with simple quantitative analysis we show that the rate of entropy production caused by human economic activities is very small compared to the continuous natural entropy production in the atmosphere and on the earth s surface further the societal entropy production is well within the range of natural variation it is possible to replace part of the natural entropy production with societal entropy production by making use of solar energy society consumes resources otherwise available for coming generations however future generations need not have less resources available to them than the present generation human industrial activities could be transformed into a sustainable system where the more abundant elements are industrially used and recycled using solar energy as the driving resource an economic theory fit to guide industrial society in that development must not disregard thermodynamics nor must it overstate the consequences of the laws of thermodynamics 2001 elsevier science b v all rights reserved

the dynamics of human environment interactions in the collapse of the classic maya abstract in this study we investigate the societal development of the maya in the southern lowlands over a span of approximately 1400 years and explore whether societal dynamics linked to the depletion of natural resources can explain the rise and fall of the classic maya we propose a dynamical systems model that accounts for the state of the land population and workers employed in swidden and intensive agriculture and monument building optimisation of model output to fit empirical data fixes biometric parameters to values consistent with the literature and requires that a shift from swidden to more intensive agriculture took place at around 550 ce the latter prediction is consistent with the dating of the beginning of the late classical period thus our model offers an explanation of the collapse of the society of the maya and suggests that the role of droughts may have been overestimated consistent with previous work the collapse can be modelled by a critical transition supercritical hopf bifurcation where the critical parameter is the harvesting rate per capita of intensive agriculture furthermore an extensive sensitivity analysis indicates that the model and its predictions are robust

the systems dynamics of endogenous population growth in a renewable resource based growth model abstract this paper evaluates the dynamic effects of adding an endogenous process for human population growth into a renewable resource based economic growth model endogenizing human population growth in a static constant technology form of the model gives rise to a dynamically complex system with the possibility of multiple steady states of several types and unusual comparative static responses to changes in the system s parameters adding technological progress to the model gives rise to the possibility of multiple sustainable paths for the variables in the system these results reinforce concerns raised by ecological economists about systems stability and sustainability since exogenous shocks to the system could move the economy from higher welfare to lower welfare equilibria or in the model with technological progress from higher welfare to lower welfare sustainable growth paths moreover this kind of dynamic complexity adds to the management challenge faced by policy makers who could confront the necessity of maneuvering the economy among different equilibria or sustainable growth paths

energy transition towards economic and environmental sustainability feasible paths and policy implications this paper focuses on growth feasibility in an era of increasing scarcity of fossil fuels a stylised dynamic model illustrates the implications of investing in smooth technological progress in the field of renewable energy positive rates of gdp growth sustained by fossil fuels entail on the one hand more income available for r d in renewable energy sources and on the other an acceleration of the exhaustible resource depletion time our model explores such a trade off and highlights the danger of high growth rates policies should target low growth rates stimulate investment in alternative energy sources and discourage consumption growth

natural versus manufactured capital win lose or win win a case study of the finnish pulp and paper industry abstract the effect of investments on environmental variables has been discussed through the win win rhetoric specifically in micro level analysis on the macro level the win win rhetoric has been replaced by the arguments for and against the substitutability of natural and manufactured capital here these two concepts belonging to different levels of analysis are linked by looking at the environmental and economic effects of chosen investment strategies in a traditionally capital intensive industry over time the paper shows that rather than generalise the existence of win win situations or the substitutability of capital these positions are determined by purely situational factors as a result in the assessment of substitutability the specific operating context of the industry needs to be taken into account this implies also that environmental policy needs to be designed to be adaptive and responsive to those situational factors to create beneficial outcomes for the economy and for the environment

a renewable resource based ramsey model with costly resource extraction this paper derives the analytical solution of arenewable resource based ramsey economy withcostly resource extraction the goal is toascertain whether costly resource extractioncan induce nonlinear dynamical properties in the system we find that the solution for a model with constant technology can exhibit multiple steady states and the comparative statics effects for consumption utility and the stock of nature capital areambiguous in a number of different cases moreover thesolution for a model with exogenous technological progress exhibits unusual comparative dynamics andthe possibility of multiple balanced growthpaths an increase in the rate of technologicalprogress induces a long run growth rate in per capitaconsumption that depends on parameters of the productionfunction overall technological progress inthe model can be less beneficial than in the standardeconomic growth model in which resourceextraction is costless

conservation of mass and instability in a dynamic economy environment system abstract this paper considers a variant of the neumann leontief sraffa general equilibrium models in the context of a jointly determined economy environment system subject to a conversation of mass condition it shows that the conservation of mass contradicts the free disposal free gifts and non innovation assumptions of such models that an expanding economy will be associated with continuous disequilibrating change in the material transformations of both economy and environment and that this change is uncontrollable through the price system

georgescu roegen s flow fund theory of production in retrospect abstract this paper provides a synthetic account of georgescu roegen s flow fund theory as a contribution to the history of ecological economics it reconstitutes georgescu roegen s perspective on production and its relationships with other frameworks such as the neoclassical production function and input output tables the overall purpose is to clearly establish the foundations of the flow fund theory and to introduce the research perspectives it opens for ecological economics the paper puts particular emphasis on the relationships between the flow fund framework and two other aspects of georgescu roegen s thought first his methodological perspective on economics and the role of mathematical models allows for a better understanding of the foundations of the flow fund theory second this framework incorporates georgescu roegen s interest in the physical dimension of the economic process and the implications of the laws of thermodynamics overall the paper concludes that the flow fund theory has solid foundations and thus represents a credible alternative to standard theories of production however in order to show how this framework can shed light on contemporary issues in ecological economics more applications are needed especially at the theoretical level the main challenge for future research is to develop such applications while trying to be faithful to the foundations of the flow fund theory

ecosystems externalities and economies this paper incorporates an ecosystem model into a model of a simple economy the decisionmaking agents in the ecosystem are individual organisms aggregated to the species level a species may provide utility directly to humans or it may provide utility indirectly because it is used either as a raw material in goods fabrication or as sustenance for other species we describe a comparative static equilibrium of the ecosystem where species demands for other species are equal to the supplies of those other species and energy is conserved the ecosystem is then embedded in the economy so that the effects of human intervention can be traced through both the ecosystem and the economy human intervention creates ecosystem externalities such that ecosystem equilibria are shifted and the new equilibria affect the utility or the production processes of other humans this framework allows us to describe in principle which ecosystem services can be efficiently usurped by humans which waste flows can be efficiently allowed into ecosystems and which ecosystem organisms and physical attributes can be efficiently maintained

baby boomer retirement security the roles of planning financial literacy and housing wealth abstract we compare wealth holdings across two cohorts of the health and retirement study the early baby boomers in 2004 and individuals in the same age group in 1992 levels and patterns of total net worth have changed relatively little over time though boomers rely more on housing equity than their predecessors most important planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non planners instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth

efficiency properties of large dynamic markets this paper considers an infinitely repeated cournot market with discounting it studies the asymptotic properties of stationary perfect equilibria in such a market when the demand and production sectors are replicated indefinitely specifically the paper establishes 1 necessary and sufficient conditions for the approximate competitiveness and efficiency of stationary perfect equilibria 2 necessary and sufficient conditions for the presence of excessive competition and for the presence of limited competition at some stationary perfect equilibria and 3 conditions for approximately competitive stationary perfect equilibria to be approximately efficient the analysis focuses on the case where the market discount factor is close to unity copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

renewable resources property rights regimes and endogenous growth abstract we extend brander and taylor s brander j a taylor m s 1998 the simple economics of easter island a ricardo malthus model of renewable resource use am econ rev 88 119 138 model of feast and famine cycles on easter island using galor and weil s gailor o weil d n 2000 population technology and growth from malthusian stagnation to the demographic transition and beyond am econ rev 90 806 28 model of endogenous technological advance where technological change is related to the population we note that different property rights regimes will influence the relative direction of technological advance whether that advance is in harvesting technologies or in technologies that influence the growth rate of some renewable biological resource property rights regimes that favor biological growth rates over harvest rates tend to dampen feast famine cycles while those that favor harvest efficiency worsen such cycles

capturing the least costly way of reducing pollution a shadow price approach abstract the production analysis literature is increasingly concerned with estimating marginal abatement costs yet most studies do not emphasize the ways in which pollutants may be reduced and their costs which makes them unable to identify the least costly compliance strategy this paper utilizes the materials balance principle to relate pollution to the employment of material inputs a production model which allows input and output substitution downscaling of operations pollution control and emission permits purchases as compliance strategies is proposed and the implications of joint and non joint pollution controls for the trade off between pollutants and desirable outputs are considered marginal abatement costs reflecting the least costly way of compliance are derived by exploiting the duality between the directional distance function and the profit function

on the collapse of historical civilizations to explain the collapse of historical civilizations scholars typically point to suboptimal behaviors including misunderstanding the natural environment shortsightedness or a lack of institutions we examine the collapse of four historical societies with a model of endogenous population growth and renewable resources employing components of optimal resource management economic growth theory and the moral philosophy of social welfare function choice we find that these collapses may have been socially optimal further we show that the transient behavior of the system is more sensitive to assumptions than the equilibrium behavior and that focusing solely on equilibria may miss key insights copyright 2009 oxford university press

the impact of environmental regulations on industry productivity direct and indirect effects abstract the paper develops an approach to measuring the impact of environmental regulations on total factor productivity growth which is less restrictive than a simple growth accounting approach environmental regulations have a direct impact on productivity growth due to the diversion of resources toward required abatement capital there can be a further indirect effect however as conventional inputs and production processes are changed in response to requirements to purchase abatement capital we estimate this indirect effect using a flexible functional form cost function total factor productivity and the direct and indirect productivity effects of environmental regulations are presented for five polluting industries we find that the indirect effect can be either positive or negative and in all industries is energy using the net impact of environmental regulations on total factor productivity growth is fairly small given that these are the most polluting industries they account for about 10 30 of the productivity decline of the 1970s in these industries

the role of information on retirement planning evidence from a field study i introduction modern financial planning is dominated by discussions of one topic retirement savings retirement planning behaviors are widely studied yet population data show perplexing patterns of savings especially among households who reasonably should expect to live long and healthy lives after separating from the workforce savings choices are increasingly focused on the decisions of individuals rather than on public plans or employer mandated pensions poterba 2014 however policymakers attempts to stimulate more individual level savings have not shown strong effects duflo et al 2007 one problem appears to be related to people failing to fully plan ahead for retirement and neglecting longer run financial management in general ameriks caplin and leahy 2003 according to the employee benefit research institute 2015 more than one in four workers have less than 1 000 in retirement savings fewer employees today have access to defined benefit pensions than they did in the past and instead rely on employer based 401 k savings accounts and nonemployer based individual retirement accounts iras munnell 2006 however participation rates remain low 43 of private sector workers of age 25 64 take part in retirement savings programs calabrese 2011 even among active savers there are concerns about how well people are able to manage their retirement accounts in ways that reflect optimal planning horizons several policies have been designed to increase participation in retirement plans first firm level programs requiring employees to opt out vs opt in to a 401 k plan have increased participation in retirement savings plans madrian and shea 2001 however as choi laibson and madrian 2011 highlight because individuals have heterogeneous savings preferences these default options may be costly to individuals as some might save more in the absence of the default and others might prefer to save less second government designed tax breaks for individuals investing in retirement accounts and increases in maximum income deferral limits for these accounts could increase retirement savings however income tax deductions and credits can be costly tax expenditures and individuals especially lower and middle income savers may not respond to these incentives engen gale and scholz 1996 third firms can try to help people better understand their savings options and make plans for retirement effectively lowering the costs of information with workshops and or counseling retirement planning requires information in order to form expectations about lifetime income years of work expected investment returns adjusted for risk and consumption levels in retirement people who lack information about these issues may fail to make a plan or proceed to design a plan based on incomplete information educational programs targeted to workers hold promise to help people recalibrate their expectations and shift their savings behavior well targeted financial education might facilitate people to pursue their individual retirement saving preferences in ways that default rules or incentives alone cannot this article studies the effect of financial education on retirement savings offered to employees in an online format online information offers several advantages over traditional seminars for example online courses can be delivered to a large audience and at a lower cost per participant than classroom delivery it also poses relatively low marginal costs to the employee because of the flexibility and convenience of the mode of delivery it may serve employees who would not attend in person sessions while participants in online education do not benefit from group interactions online delivery provides participants privacy to explore financial issues that they might shy away from in more public settings several studies document that employer based education is associated with improvements in employees financial knowledge clark and d ambrosio 2002 holland goodman and stich 2008 skimmyhorn forthcoming

bertrand equilibria with entry limit results abstract we study the limiting behaviour of bertrand equilibria where firms must supply the whole of the demand coming to them for two different cases first when entry is exogenous and second when it is free the limit equilibrium set is characterised for both cases for a large class of cost functions

the inada conditions for material resource inputs reconsidered it is shown that the thermodynamic law of conservation of mass the so called materials balance principle implies that the marginal product as well as the average product of a material resource input are bounded from above this means that the inada conditions one of the standard assumptions of economic growth theory when applied to material resource inputs are inconsistent with a basic law of nature the analysis is based on a model of multi level production where intermediate goods are produced from elementary resources and an all purpose final commodity is produced from these intermediates

human and nature dynamics handy modeling inequality and use of resources in the collapse or sustainability of societies abstract there are widespread concerns that current trends in resource use are unsustainable but possibilities of overshoot collapse remain controversial collapses have occurred frequently in history often followed by centuries of economic intellectual and population decline many different natural and social phenomena have been invoked to explain specific collapses but a general explanation remains elusive in this paper we build a human population dynamics model by adding accumulated wealth and economic inequality to a predator prey model of humans and nature the model structure and simulated scenarios that offer significant implications are explained four equations describe the evolution of elites commoners nature and wealth the model shows economic stratification or ecological strain can independently lead to collapse in agreement with the historical record the measure carrying capacity is developed and its estimation is shown to be a practical means for early detection of a collapse mechanisms leading to two types of collapses are discussed the new dynamics of this model can also reproduce the irreversible collapses found in history collapse can be avoided and population can reach a steady state at maximum carrying capacity if the rate of depletion of nature is reduced to a sustainable level and if resources are distributed equitably

quantitative versus qualitative growth with recyclable resource we reassess the issue of limits to growth in an endogenous growth model of a decentralized economy where final productions require a recyclable essential material input the model follows a material balance approach and relies on technological assumptions consistent with the material balance principle and on explicit distinction between the material content and the quality of produced goods growth follows from research activities that allow firms to improve the quality of their output and to reduce the material resource intensiveness of their production process even though recycling is assumed perfect we show that 1 the material balance constraint affect the whole transitory dynamics of the growth process 2 quantitative growth i e positive growth of material output can only be a transitory phenomenon long term economic growth taking exclusively the form of perpetual improvements in the quality of final goods a long term growth path is characterized by constant values of material variables or in a less favorable scenario by a constant negative growth rate of those variables we establish the existence conditions of a growth path based on quality improvements and constant material variables it may fail to exist in a decentralized framework even though it is quite feasible from a purely physical point of view

entropy limits to growth and the prospects for weak sustainability in this paper we analyze the consequences of mass and energy conservation and the second law of thermodynamics for economic activity in contrast to former studies we deduce our results formally from a general model of production and consumption we show that in a static setting for economies containing irreversible processes a non zero resource input as well as non zero emissions are necessary to sustain a positive level of consumption we generalize this result to a dynamic setting and apply it to the growth discussion and the sustainability discourse thereby we show that limits to growth of production and consumption are likely to exist and that the concept of weak sustainability is either morally unattractive or physically infeasible d 2005 elsevier b v all rights reserved

easter island historical anecdote or warning for the future two standard solutions for the malthusian trap involve institutional reforms and technological progress using easter island as an example we investigate the hypothetical role that technological progress and population management reform might have played in preventing the collapse of the island s civilization the model includes a composite manufactured good and a composite harvested renewable resource fertility is assumed to rise with per capita income the resource s carrying capacity and intrinsic growth rate as well as labor s harvesting productivity are subject to technological progress fertility is subject to population management reform the model yields a system of two simultaneous nonlinear non autonomous differential equations we first study the system s steady states the system is then parameterized for easter island and its comparative dynamics are investigated in simulations we find that technological progress can generate large fluctuations in population renewable resources and per capita utility sometimes resulting in system collapse with high fertility rates the population and the resource vanish none of the simulations investigated here exhibit a constantly growing per capita utility over time finally we evaluate the applicability of these results to contemporary societies 2000 elsevier science b v all rights reserved

indicators of sustainable development some lessons from capital theory abstract interest in sustainable development has prompted a search for suitable indicators that might complement or supplant the traditional measures of economic success although there is no agreement about the precise meaning of sustainable development one idea which is increasingly in good currency is that sustainable development requires that the stock of capital that one generation passes on to the next be maintained or enhanced further this stock of capital is seen by some to comprise two elements manufactured capital and natural capital the extent to which these are believed to be substitutes or complements is one factor which separates the neoclassical school from some of its critics a premise of this paper is that if capital theory is relevant to sustainable development then it should also be helpful in developing indicators however even within the normal confines of economics capital theory is not a homogeneous body of analysis therefore an exploration of capital theory and its relevance to sustainable development can be expected to generate various perspectives on those measures most useful for gauging the sustainability of economic activity it is these linkages between capital theory in various schools of thought and possible indicators of sustainable development that are the subject of this paper

venture capital contracting under asymmetric information abstract a model is developed wherein entrepreneurs and venture capitalists contract under symmetric information asymmetric information may arise following first contracting it is shown this can lead to debt infeasibility and preferred equity usage control is linked to choice between common and preferred results are robust to multiperiod extensions roles of convertible preferred retained equity and debt in ipos are considered an empirical survey of venture capital firms is presented demonstrating preferred dominates in early financing debt and common are used far less generally at later stages under lower probability of asymmetric information these results agree with the theory s implications

optimizing the shares of native tree species in forest plantations with biased financial parameters abstract addressing uncertainty is a key requirement to follow the principle of precaution in sustainable ecosystem management the maximization of worst case outcomes according to the maximin decision rule based on the two parameters mean and variance of a financial indicator is a prominent approach to integrate uncertainty in decision making in forestry the problem of selecting the optimum tree species combination for a forest plantation investment can be seen as a problem of optimal portfolio selection to be solved according to the maximin decision rule yet it is well known that portfolios computed from expected means and variances are highly sensitive to changes in the estimated parameters the financial results may be poor if we rely too much on the historical data this paper tests an extended worst case model that considers a lower bound for the expected mean net present value npv of a tree species portfolio and an upper bound for its variance biased expected mean npvs variances and correlations for the tree species picea abies l karst spruce and fagus sylvatica l beech were used to test the variability of the resulting tree species portfolios 27 scenarios a comprehensive simulated data set which was adopted from an existing study and defined as the independent reference served to evaluate the financial performance of the tree species portfolios obtained from optimization with the biased data compared with the results of classical worst case optimization instances it was feasible to reduce the variability of tree species shares effectively when the optimization was carried out with the extended worst case approach furthermore the financial performance of this approach was better when tested with the independent data the worst case forest npvs achieved with the extended approach were on average 10 statistical confidence 0 95 or 147 statistical confidence 0 99 greater in comparison to the results of the classical approach the influence of the uncertainty parameter selection was tested and the results were discussed against the controversial viewpoints on the usefulness of the information gap decision theory finally the significance of our results for sustainable ecosystem management is pointed out

coupled societies are more robust against collapse a hypothetical look at easter island inspired by the challenges of environmental change and the resource limitations experienced by modern society recent decades have seen an increased interest in understanding the collapse of past societies modelling efforts so far have focused on single isolated societies while multi patch dynamical models representing networks of coupled socio environmental systems have received limited attention we propose a model of societal evolution that describes the dynamics of a population that harvests renewable resources and manufactures products that have positive effects on population growth collapse is driven by a critical transition that occurs when the rate of natural resource extraction passes beyond a certain point for which we present numerical and analytical results applying the model to easter island gives a good fit to the archaeological record subsequently we investigate what effects emerge from the movement of people goods and resources between two societies that share the characteristics of easter island we analyse how diffusive coupling and wealth driven coupling change the population levels and their distribution across the two societies compared to non interacting societies we find that the region of parameter space in which societies can stably survive in the long term is significantly enlarged when coupling occurs in both social and environmental variables

perfectly competitive markets as the limits of cournot markets a perfectly competitive partial equilibrium market for a single homogeneous good with a bounded continuum of infinitesimal firms is considered cost functions are essentially unrestricted and are allowed to vary smoothly across firms a sequence net of cournot markets each with a finite number of firms which converge smoothly to the perfectly competitive limit in terms of both the inverse demand functions and the distributioon of firm technologies is introduced and it is shown that all markets sufficiently far along the sequence have a cournot equilibrium and all the cournot equilibria converge to the perfectly competitive equilibrium of the limit market

the role of financial literacy in determining retirement plans nber working paper seriesthe role of financial literacy in determining retirement plansrobert clarkmelinda sandler morrillsteven g allenworking paper 16612http www nber org papers w16612national bureau of economic research1050 massachusetts avenuecambridge ma 02138december 2010this research is funded in part by a grant from finra investor education foundation we wouldlike to thank jennifer maki mehtab randhawa and evan rogers for their research assistance theresearch could not have been accomplished without the cooperation of the companies that partneredwith us we would also like to thank nicholas horsewood annamaria lusardi olivia mitchell andtwo anonymous referees for useful comments all remaining errors are our own the views expressedherein are those of the authors and do not necessarily reflect the views of the national bureau of economicresearch finra investor education foundation or any of its affiliated companies 2010 by robert clark melinda sandler morrill and steven g allen all rights reserved shortsections of text not to exceed two paragraphs may be quoted without explicit permission providedthat full credit including notice is given to the source

environmental efficiency and labour productivity trade off or joint dynamics a theoretical investigation and empirical evidence from italy using namea in this paper we test an adapted ekc hypothesis to verify the relationship between environmental efficiency namely emissions per unit of value added and labour productivity value added per employee we exploit namea data on italy for 29 sector branches and 6 categories of air emissions for the period 1991 2001 we employ data on capital stock and trade openness to test the robustness of our results on the basis of the theoretical and empirical analyses focusing on innovation firm performances and environmental externalities we would expect a positive correlation between environmental efficiency and labour productivity a negative correlation between the emissions intensity of value added and labour productivity which departs from the conventional mainstream view the hypothesis tested is a critical one within the longstanding debate on the potential trade off or complementarity between environmental preservation and economic performance which is strictly associated with the role of technological innovation we find that for most air emission categories there is a positive relationship between labour productivity and environmental efficiency labour productivity dynamics then seem to be complementary to a decreasing emissions intensity in the production process taking a disaggregate sector perspective we show that the macro aggregate evidence is driven by sector dynamics in a non homogenous way across pollutants services tend always to show a complementary relationship while industry seems to be associated with inverted u shape dynamics for greenhouse gases and nitrogen oxides this is in line with our expectations in any case ekc shapes appear to drive such productivity links towards complementarity the extent to which this evidence derives from endogenous market forces industrial and structural change and policy effects is discussed by taking an evolutionary perspective to innovation and by referring to impure public goods arguments

social interactions in asset allocation decisions evidence from 401 k pension plan investors abstract this paper investigates social interaction effects on individual asset allocation decisions using a rich dataset of 159 329 individuals enrolled in 401 k plans we find that individuals are likely to increase decrease their risk shares when their coworkers have higher lower risk exposures over the last quarter the social interaction effects are especially strong among individuals with extreme asset allocations and low equity investment performance we also divide the workplaces into subgroups to examine how social interaction effects vary among coworkers with different backgrounds results from additional tests indicate that estimated social interaction effects are not primarily driven by common preferences common environments or reverse causality

effectiveness of employer provided financial information hiring to retiring in order to maximize lifetime utility workers must make choices throughout their careers to plan and save for retirement with the aging of the baby boomers and increasing life expectancies it is more important than ever for individuals to ensure they have adequate savings and resources for retirement to make optimal choices individuals need sufficient knowledge of how both national and employer provided retirement plans work and what benefits they should expect further they must have adequate financial literacy to navigate complex financial instruments and to understand the importance of various plan characteristics traditional models of life cycle earnings and consumption are based on the assumption that workers are aware of investment options understand the benefits they will receive from various retirement plans and have the ability to assess the impact of their saving decisions

the ecology of money a critical assessment abstract this paper assesses the proposal to transform the monetary system into an ecology of money that is into a system made of a large diversity of complementary currencies its central aim is to examine whether this proposal could provide a systemic solution to both the ecological and financial crises as several authors most notably lietaer and douthwaite have argued to this end it analyses the two main arguments in favour of this proposal first it focuses on the claim that an ecology of money would be more resilient and less prone to crisis than the present monetary system it shows that this argument suffers from several conceptual flaws and argues that it fails to provide sufficient normative reasons to favour an ecology of money second this paper analyses the claim that an ecology of money could help defeat the monetary growth imperative that supposedly plagues our economies the paper raises serious doubts about the existence of such an imperative and questions the claim that an ecology of money could contribute to weaken it in a significant way

energy consumption and economic growth in new zealand results of trivariate and multivariate models abstract this study examines the energy consumption growth nexus in new zealand causal linkages between energy and macroeconomic variables are investigated using trivariate demand side and multivariate production models long run and short run relationships are estimated for the period 1960 2004 the estimated results of demand model reveal a long run relationship between energy consumption real gdp and energy prices the short run results indicate that real gdp granger causes energy consumption without feedback consistent with the proposition that energy demand is a derived demand energy prices are found to be significant for energy consumption outcomes production model results indicate a long run relationship between real gdp energy consumption and employment the granger causality is found from real gdp to energy consumption providing additional evidence to support the neoclassical proposition that energy consumption in new zealand is fundamentally driven by economic activities inclusion of capital in the multivariate production model shows short run causality from capital to energy consumption also changes in real gdp and employment have significant predictive power for changes in real capital

georgescu roegen versus solow stiglitz daly is right to be concerned about our society s use of resources environmental degradation and the wasteful use of natural resources or any resources for that matter are of concern daly s tirade concerning our work seems motivated by two concerns a lack of consistency with basic laws of physics and the alleged implication that growth can continue unabated without eventually facing constraints imposed by the limited supply of natural resources part of the problem arises from a lack of understanding of the role of the kind of analytic models that we and others have formulated they are intended to help us answer questions like for the intermediate run for the next 50 60 years is it possible that growth can be sustained what does this possibility entail we write down models as if they extend out to infinity but no one takes these limits seriously for one thing an exponential increase in the population presents almost unimaginable problems of congestion on our limited planet in this intermediate run capital can substitute for natural resources and this is true even though capital itself uses resources more precise machines made out of resources that are relatively abundant can reduce wastage of resources that are relatively scarce technical change some of which is the result of investments in rd and increased efficiency in production may imply less wastage of bauxite and less coal or oil to produce the energy used to make a pound of aluminum or consider the resources that were required to run a regression only a half century ago pounds and pounds of heavy calculating machines replaced by mere ounces of a modern calculator changes in technology also allow us to recycle resources more efficiently so that the amount that is not recaptured for future production may be reduced perhaps the most important question is where does all of this lead us resources are scarce and markets when they function well reflect that scarcity economizing on the use of resources there are important instances especially where the environment and natural resources are concerned where markets do not work well there are for instance the classic problems posed by pollution externalities when markets do not

new economic theories this paper analyses some of the most important spillovers of recent developments of economic theory into environmental economics attention is given to the anlaysis of sustainable economic development paths where endogenous growth models are used the implications of environmental dumping and more generally of policies concerning global environmental issues where new trade theories are very useful and the effectiveness of environmental policy instruments when markets are imperfectly competitive where industrial organisation theory is employed the paper does not only note recent developments in environmental economics but also relates these to the previous environmental economics literature thus it can be assessed whether new results actually improve our knowledge of crucial economic and environmental issues

constraints on dematerialisation and allocation of natural capital along a sustainable growth path abstract to study societal and biophysical constraints on sustainability we present an extension of the neoclassical growth model with two new concepts allocation of natural capital and dematerialisation we consider that anthropogenic environmental impact is correlated with the material throughput of the economy materialisation and that due to composition change and innovation this throughput can be reduced the process of dematerialisation we also consider that the allocation of natural capital to production negatively affects the endogenous dynamics of ecosystems reducing the total amount of environmental services ecosystems provide according to our model it is possible to achieve unbounded economic growth by keeping the natural system in steady state balanced growth however is only possible for special parameter values

economic de growth vs steady state economy in recent years the concept of economic de growth decroissance based on the literature of nicolas georgescu roegen e g 1 3 has found a revival in france italy spain and other countries in the popular as well as in the academic literature therein authors took on board georgescu roegens categorical rejection of a steady state economy sse as proposed by herman daly 4 they argue that economic degrowth is the only viable alternative goal to the growing economy this position is challenged in this article and it is concluded that the two concepts are in fact complements economic de growth is not a goal in itself but the rich north s path towards a globally equitable sse moreover the de growth literature can benefit from the strong economic historic roots of the sse and from daly s macroeconomic concepts while in return being able to give lessons about bottom up approaches this would be particularly important for the population issue where daly proposes limited birth licences unfortunately statements on demography are inconsistent and underdeveloped in the de growth literature further it is concluded that most criticisms of the sse are due to a too narrow and technocratic interpretation of the concept instead the sse should be defined as a quasi steady state resting in a dynamic equilibrium and as an unattainable goal which can and probably should be approximated