MACROECONOMICS AND THE ENVIRONMENT: REVISIONS TO SELECTED FRAMEWORKS AND POLICY ANALYSIS

Abstract

Macroeconomic policies aim to stabilise an economy in the short term and to maintain a steady rate of economic growth and employment in the long term. The three primary policy variables are: level of aggregate output, employment and inflation. However, steps should be taken to ensure that the natural environment is considered. The challenge addressed in this thesis is the provision in macroeconomics for affording recognition to KN besides the traditional factors of labour (L) and capital (KM). Such recognition would enable the formulation of effective and sustainable policies. This thesis argues why and how current practices of policy formulation must change by recourse to the utilisation of environmental-macroeconomic (EM) frameworks.