NIESR Macroeconomics of Sustainability Presentation

This focuses mainly on my approach, since Tim’s is something I appreciate but lack the (thermodynamics) mathematics to present adequately.

What we have done is introduce energy into both Neoclassical (Cobb Douglas and CES) and Post Keynesian (Leontief) models of production, and see what the consequences of this are. They include:

* Explaining the “Solow Residual”. It is not “Total Factor Productivity”, but the contribution to production from the energy throughput of the “representative machine”. This has gone from ten tons of fuel per day in the time of Stephenson’s “Rocket” steam train, to 10 tonnes per second in the time of Elon Musk’s Falcon 9 rocket.

* Showing that the “capital: output ratio” in Post Keynesian economics is actually the efficiency with which machinery converts energy into useful work.

This talk includes a fair bit of back-and-forth with the audience, who are the convenors and researchers being funded by the sustainability hub.