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Fiscal policy and ecological sustainability: a post-Keynesian perspective

Fiscal policy and ecological sustainability: a post-Keynesian perspective

Dafermos, Yannis and Nikolaidi, Maria (2019) Fiscal policy and ecological sustainability: a post-Keynesian perspective. [Working Paper] (doi:https://doi.org/10.1007/978-3-030-23929-9)

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Abstract

Fiscal policy has a strong role to play in the transition to an ecologically sustainable economy. This paper critically discusses the way that green fiscal policy has been analysed in both conventional and post-Keynesian approaches. It then uses a recently developed post-Keynesian ecological macroeconomic model in order to provide a comparative evaluation of three different types of green fiscal policy: carbon taxes, green subsidies and green public investment. We show that (i) carbon taxes reduce global warming but increase financial risks due to their adverse effects on the profitability of firms and credit availability; (ii) green subsidies and green public investment improve ecological efficiency, but their positive environmental impact is partially offset by their macroeconomic rebound effects; and (iii) a green fiscal policy mix derives better outcomes than isolated policies. Directions for future heterodox macroeconomic research on the links between fiscal policy and ecological sustainability are suggested.

Item Type: Working Paper
Uncontrolled Keywords: post-Keynesian economics, ecological economics, green fiscal policy, stock-flow consistent modelling
Subjects: H Social Sciences > H Social Sciences (General)
J Political Science > JC Political theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 29 Oct 2019 15:38
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/25868

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