DOI link for Environmental capital
Environmental capital book
This chapter explores environmental macroeconomics as both a relevant and important theme in economics. The model is based on the assumption that aggregate production in the economy stems from a set of symmetrically uniform firms and industries. The chapter deals with three theories that have contributed to the explanation of long-run stabilisation: the Harrod–Domar model, the Swan–Solow steady-state model and the more contemporary endogenous growth models. Harrod–Domar model are overestimates on the grounds that economic performance has to be explained by factors beyond savings and capital accumulation. Reformulating the three growth models considered earlier to recognise KN leads to distinct policy conclusions, which centre on moderation rather than expansion. It is pertinent to argue that had KN been afforded due recognition in macroeconomics, the inventory of environmental issues that confront contemporary society would be smaller rather than larger.