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Global macroeconomic sustainability: a dynamic general equilibrium approach

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  • BAILEY, RALPH W.
  • CLARKE, ROSEMARY

Abstract

Previous empirical studies assessing sustainability have adopted the weak sustainability indicator (WSI) which measures changes in the stock of physical and natural capital. Whereas these studies have been retrospective, we use a dynamic general equilibrium model to investigate global and regional sustainability over the period 1985–2050, focusing on fossil fuel extraction. Our standard scenario predicts increasing WSI values suggesting global sustainability in all periods to 2050 as, despite a rising world oil price, the introduction of backstop fuels in 2010 provides an alternative source of energy. A more pessimistic scenario examines possible outcomes in the absence of energy saving technological change and backstops fuels. WSI values still indicate global sustainability, though economic growth is only half that predicted by the more optimistic model, and two countries—USA and Brazil—are unsustainable.

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  • Bailey, Ralph W. & Clarke, Rosemary, 2000. "Global macroeconomic sustainability: a dynamic general equilibrium approach," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 177-194, February.
    • Handle: RePEc:cup:endeec:v:5:y:2000:i:01:p:177-194_00
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    Cited by:

    1. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 25, pages 399-417, Edward Elgar Publishing.
    2. Louis Dupuy, 2012. "International Trade and Sustainability: A survey," Larefi Working Papers 1201, Larefi, Université Bordeaux 4.
    3. Giles Atkinson & Kirk Hamilton & Giovanni Ruta & Dominique Van Der Mensbrugghe & Giovanni Ruta, 2010. "Trade in 'Virtual Carbon' : Empirical Results and Implications for Policy," World Bank Publications - Reports 19903, The World Bank Group.
    4. Atkinson, G. & Hamilton, K., 2002. "International trade and the 'ecological balance of payments'," Resources Policy, Elsevier, vol. 28(1-2), pages 27-37.
    5. Louis Dupuy, 2012. "International Trade and Sustainability: A survey," Larefi Working Papers 201201, Larefi, Université Bordeaux 4.

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