Mainstream economics has not adequately dealt with the long-term consequences of economic growth with regard to the effects of climate change, shifts toward a service-centered economy, and potential financial and fiscal instability. This project helps correct this gap. The effects of climate change are examined in both standard and demand-driven growth models, with emphasis on attainable improvements in welfare from correcting the greenhouse-gas externality (which is often analyzed in a biased fashion in mainstream models). The study also investigates related issues, including the viability of service-centered growth in advanced economies, possible divergence in international growth patterns, and potential financial and fiscal cyclicality and instability.
Economic Sustainability, Distribution, and Stability