Interplaying demand-led growth and energy supply constraints a Sraffian Supermultiplier Model with Energy Sector

This work aims to develop an analytical model that addresses the transition to a low-carbon economy by interplaying demand-driven dynamics and energy supply constraints. As the modeling of energy production in the ecological macroeconomics literature has been addressed within supplydriven growth models, the novelty of this article lies in integrating the energy sector into a demandled growth framework. On the growth side, our model follows the Sraffian supermultiplier literature (Serrano, 1995). On the energy side, it draws inspiration from Bernardo and D’Alessandro (2016), explicitly modeling energy production from renewable sources. We assume business-as-usual and green government expenditures are sources of autonomous demand, with investment and capital stock composed of green and conventional components, respectively. The growth and energy sides of the model are connected through a green investment equation, which embodies a constraint on green capital stock accumulation given by the availability of renewable energy. Therefore, the growth dynamics are demand-driven, but the feasibility of the ecological transition is supply-constrained. Numerical simulations demonstrate that scenarios combining green fiscal policy and low growth are more conducive to promoting the energy transition, aligned with post-growth approaches.