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Macroeconomic dynamics in a finite world based on thermodynamic potential

Author

Listed:
  • Éric Herbert

    (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité, UPCité - Université Paris Cité, CNRS - Centre National de la Recherche Scientifique)

  • Gaël Giraud
  • Aurélie Louis-Napoléon

    (IMFT - Institut de mécanique des fluides de Toulouse - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse - CNRS - Centre National de la Recherche Scientifique - Toulouse INP - Institut National Polytechnique (Toulouse) - UT - Université de Toulouse)

  • Christophe Goupil

    (LIED (UMR_8236) - Laboratoire Interdisciplinaire des Energies de Demain - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité, IUF - Institut universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche)

Abstract

This paper presents a conceptual model describing the medium and long term co-evolution of natural and socio-economic subsystems of Earth. An economy is viewed as an out-of-equilibrium dissipative structure that can only be maintained with a flow of energy and matter. The distinctive approach emphasized here consists in capturing the economic impact of natural ecosystems' depletion by human activities via a pinch of thermodynamic potentials. This viewpoint allows: ( i ) the full-blown integration of a limited quantity of primary resources into a non-linear macrodynamics that is stock-flow consistent both in terms of matter-energy and economic transactions; ( ii ) the inclusion of natural and forced recycling; ( iii ) the inclusion of a friction term which reflects the impossibility to produce (and recycle)goods and services without exuding energy and matter wastes, and ( iv ) the computation of the anthropically produced entropy as a function of metabolizing intensity and frictions. Analysis and numerical computations confirm the role played by intensity and frictions as key factors for sustainability by contrast with real gdp growth—as well as the interplay between resource scarcity, income inequality, and inflation. A more egalitarian society with moderate inflation turns out to be more sustainable than an unequal society with low inflation. Our approach is flexible enough to allow for various economic models to be embedded into our thermodynamic framework. Finally, we propose the open source E co D yco software as a first complete realization implementing economic dynamics in a multi-resource environment.

Suggested Citation

  • Éric Herbert & Gaël Giraud & Aurélie Louis-Napoléon & Christophe Goupil, 2023. "Macroeconomic dynamics in a finite world based on thermodynamic potential," Post-Print hal-04872636, HAL.
    • Handle: RePEc:hal:journl:hal-04872636
    DOI: 10.1038/s41598-023-44699-y
    Note: View the original document on HAL open archive server: https://hal.science/hal-04872636v1
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    References listed on IDEAS

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