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Abstract This paper presents a post-Keynesian ecological macromodel, which is stock-flow consistent, and incorporates directed technological change. Private and public R&D spending across three competing, yet complementary inputs – Labor, Capital, and Resources – follow a portfolio allocation decision, where inputs with relatively higher growth in costs, see higher R&D investment and productivity gains. Two policy experiments are reported; a market-based Resource tax increase, and a centralized green policy, where public R&D budget is shifted towards Resource-saving technologies. We highlight that in the presence of labor market institutions, which give rise to hysteresis, and limited R&D budgets, a policy of continuous Resource tax growth is needed to induce Resource-saving technological change to achieve a greener economy. This needs to be coupled with planned government spending adjustment to spur demand and boost investment. The findings also suggest that a mix of market-based and centralized policies may be optimal. [ABSTRACT FROM AUTHOR]

The paper expands the BOP-constraint growth model and Kaldorian regimes (productivity and demand regimes) in order to include some of the concerns raised by ecological economics in post-Keynesian models for open economies. The demand regime is modified by taking into account Porter's hypothesis, which suggests that environmental innovations, spurred by environmental policies, can foster competitiveness. As a result, the equilibrium BOP-constrained rate of growth increases, leading to a different version of Thirlwall's Law, which opens room for analyzing the impact of environmental innovations on convergence between developing and developed economies. The productivity regime in turn considers the growth and employment implications of innovations in labor productivity (standard innovations) and environmental efficiency (environmental innovations). It is argued that the fiscal policy and composition of public expenditure matter for long run growth, employment and sustainability. [ABSTRACT FROM AUTHOR]

The monetary analysis of some ecological economists currently appears to be mostly articulated around the following core: a stationary economy (and a fortiori a degrowth economy) is incompatible with a system in which money is created as interest-bearing debt. To question the relevance of the debt-money/positive interest rate/output growth nexus, this paper adopts a critical stance towards the currently emerging ecological monetary economics from the standpoint of another strand of heterodox economics – the post-Keynesian approach. In its current state, ecological monetary economics is at odds with post-Keynesian economics in its analysis of the money–growth relationship. This will be shown using the theory of endogenous money and a simple Cambridgian–Kaleckian model where debt-money and a positive interest rate are compatible with a full stationary economy. [ABSTRACT FROM AUTHOR]

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. [Copyright &y& Elsevier]