IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v44y2021i1p68-88.html
   My bibliography  Save this article

Can we afford the Green New Deal?

Author

Listed:
  • Yeva Nersisyan
  • L. Randall Wray

Abstract

The cost of the Green New Deal is usually estimated in financial terms, adding the projected costs of the various programs which leads to the conclusion that large tax hikes would be needed to pay for it. In this paper, we apply the methodology developed by J. M. Keynes in How to Pay for the War to offer a better approach for evaluating the affordability of the GND. We argue that the cost of the GND must be measured in terms of real resources, not financial costs. Affordability cannot be determined by adding up the financial costs and weighing them against prospective tax increases. What is required instead is a careful accounting of the resources the GND will require, weighing those against resources it will release plus what is already in excess supply. Only then can we determine whether a reduction of aggregate demand is needed, and consequently, whether we need counter-inflationary measures, such as tax hikes. While we acknowledge the major uncertainties involved in estimating real resource costs, we argue that our approach to affordability is much more relevant than the mainstream one.

Suggested Citation

  • Yeva Nersisyan & L. Randall Wray, 2021. "Can we afford the Green New Deal?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 44(1), pages 68-88, January.
  • Handle: RePEc:mes:postke:v:44:y:2021:i:1:p:68-88
    DOI: 10.1080/01603477.2020.1835499
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/01603477.2020.1835499
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/01603477.2020.1835499?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. L. Randall Wray, 2024. "Modern Money Theory," Springer Books, Springer, edition 3, number 978-3-031-47884-0, December.
    2. Pavlina R. Tcherneva, 2018. "The Job Guarantee: Design, Jobs, and Implementation," Economics Working Paper Archive wp_902, Levy Economics Institute.
    3. Geoffrey Heal, 2017. "Reflections—What Would It Take to Reduce U.S. Greenhouse Gas Emissions 80 Percent by 2050?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 319-335.
    4. L. Randall Wray, 2016. "Why Minsky Matters: An Introduction to the Work of a Maverick Economist," Economics Books, Princeton University Press, edition 1, number 10575.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olk, Christopher & Schneider, Colleen & Hickel, Jason, 2023. "How to pay for saving the world: Modern Monetary Theory for a degrowth transition," LSE Research Online Documents on Economics 120343, London School of Economics and Political Science, LSE Library.
    2. Giuliano Toshiro Yajima, 2021. "The Employer of Last Resort Scheme and the Energy Transition: A Stock-Flow Consistent Analysis," Economics Working Paper Archive wp_995, Levy Economics Institute.
    3. Summa, Ricardo de Figueiredo, 2022. "Alternative uses of functional finance: Lerner, MMT and the Sraffiansh," IPE Working Papers 175/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Yeva Nersisyan & L. Randall Wray, 2021. "Can Biden Build Back Better? Yes, If He Abandons Fiscal "Pay Fors"," Economics Public Policy Brief Archive ppb_155, Levy Economics Institute.
    5. Olk, Christopher & Schneider, Colleen & Hickel, Jason, 2023. "How to pay for saving the world: Modern Monetary Theory for a degrowth transition," Ecological Economics, Elsevier, vol. 214(C).
    6. Françoise Drumetz & Christian Pfister, 2021. "The Meaning of MMT," Working papers 833, Banque de France.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yeva Nersisyan & L. Randall Wray, 2022. "Is It Time for Rate Hikes? The Fed Cannot Engineer a Soft Landing but Risks Stagflation by Trying," Economics Public Policy Brief Archive ppb_157, Levy Economics Institute.
    2. Yeva Nersisyan & L. Randall Wray, 2019. "How to Pay for the Green New Deal," Economics Working Paper Archive wp_931, Levy Economics Institute.
    3. Yeva Nersisyan & L. Randall Wray, 2021. "Can Biden Build Back Better? Yes, If He Abandons Fiscal "Pay Fors"," Economics Public Policy Brief Archive ppb_155, Levy Economics Institute.
    4. Dimitri B. Papadimitriou & L. Randall Wray, 2021. "Still Flying Blind after All These Years: The Federal Reserve's Continuing Experiments with Unobservables," Economics Public Policy Brief Archive ppb_156, Levy Economics Institute.
    5. Landwehr, Jannik J., 2020. "The case for a job guarantee policy in Germany: A political-economic analysis of the potential benefits and obstacles," IPE Working Papers 150/2020, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Steven Rosefielde, 2020. "Stakeholder Capitalism: Progressive Dream or Nightmare?," Book chapters-LUMEN Proceedings, in: Adriana Grigorescu & Valentin Radu (ed.), 1st International Conference Global Ethics - Key of Sustainability (GEKoS), edition 1, volume 11, chapter 3, pages 14-23, Editura Lumen.
    7. Yasuhito Tanaka, 2021. "A Mathematical Model of MMT (Modern Monetary Theory) with Profit Return," Business and Economic Research, Macrothink Institute, vol. 11(4), pages 39-55, December.
    8. Thomas Palley, 2018. "Government Spending and the Income-Expenditure Model: The Multiplier, Spending Composition, and Job Guarantee Programs," FMM Working Paper 30-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    9. Josh Ryan-Collins, 2015. "Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935-75," Economics Working Paper Archive wp_848, Levy Economics Institute.
    10. Kujtim Avdiu & Stephan Unger, 2022. "Predicting Inflation—A Holistic Approach," JRFM, MDPI, vol. 15(4), pages 1-14, March.
    11. Brett Fiebiger & Scott Fullwiler & Stephanie Kelton & L. Randall Wray, 2012. "Modern Monetary Theory: A Debate," Working Papers wp279, Political Economy Research Institute, University of Massachusetts at Amherst.
    12. Yasuhito Tanaka, 2021. "An Elementary Mathematical Model for MMT (Modern Monetary Theory)," Research in Applied Economics, Macrothink Institute, vol. 13(3), pages 1-20, September.
    13. Jörg Bibow, 2013. "Lost at Sea: The Euro Needs a Euro Treasury," IMK Studies 35-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    14. Jorg Bibow, 2015. "The Euro's Savior? Assessing the ECB's Crisis Management Performance and Potential for Crisis Resolution," Economics Working Paper Archive wp_845, Levy Economics Institute.
    15. Thomas Lagoarde-Segot, 2020. "Financing the Sustainable Development Goals," Sustainability, MDPI, vol. 12(7), pages 1-22, April.
    16. Ryan Gunderson, 2019. "Work time reduction and economic democracy as climate change mitigation strategies: or why the climate needs a renewed labor movement," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 9(1), pages 35-44, March.
    17. Gregory Casey, 2024. "Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 192-228.
    18. Phil Armstrong, 2020. "Can Heterodox Economics Make a Difference?," Books, Edward Elgar Publishing, number 19964.
    19. Tanweer Akram & Syed Al-Helal Uddin, 2021. "An empirical analysis of long-term Brazilian interest rates," PLOS ONE, Public Library of Science, vol. 16(9), pages 1-20, September.
    20. Daniel Haim, 2021. "What Jobs Should a Public Job Guarantee Provide?: Lessons from Hyman P. Minsky," Economics Working Paper Archive wp_981, Levy Economics Institute.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:44:y:2021:i:1:p:68-88. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.