The energy and climate systems have been influential in affecting economic thinking over time. Limits of natural resources, such as oil reserves or the climate’s carrying capacities, as well as human resources, have created a debate on limiting economic growth. Moreover, the economic crises in the 1970s have challenged the validity of assuming a stable relationship between inflation and unemployment.
In economic theory, this led to macroeconomic theory and modelling based on micro‐economic foundations, rejecting the Keynesian Revolution. However, the climate crisis and especially the 2008 global financial crisis, have led to further challenges to the basic assumptions of the neoclassical consensus, such as whether these micro foundations are valid, the existence of equilibrium, the separation of monetary and fiscal policy, and the economy as a closed system.
The economy is an open system, integrated with those involving energy and the environment, requiring E3 approaches for robust consideration of economic management and policies.
“Smith, Malthus, Ricardo, and Mill: The forerunners of limits to growth” – Zweig, 1979
“Climate change and social vulnerability: toward a sociology and geography of food insecurity” – Bohle et al., 1994
“The role of natural resources in economic development” – Barbier, 2012
“Reacting to the Lucas Critique: The Keynesians’ Pragmatic Replies” – Goutsmedt et al., 2017
Zweig, K. (1979) Smith, Malthus, Ricardo, and Mill: The forerunners of limits to growth, Futures, 11:6, 510‐523. Available on Elsevier.
Barbier, E. (2012) “The role of natural resources in economic development”, in Anderson K. (Ed.), Australia’s Economy in its International Context: The Joseph Fisher Lectures, Volume 2: 1956‐2012. South Australia: University of Adelaide Press. Available on JSTOR.
Goutsmedt, A., Pinzón‐Fuchs, E., Renault, M. and Sergi, F (2017) Reacting to the Lucas Critique: The Keynesians’ Pragmatic Replies. Available on SSRN.
Bohle, H.G., Downing, T.E., and Watts, M.J. (1994) Climate change and social vulnerability: toward a sociology and geography of food insecurity, Global Environmental Change, 4:1, 37-48. Available on Elsevier.