Monetary and Fiscal Policies for a Finite Planet

Joshua Farley, Matthew Burke, Gary Flomenhoft, Brian Kelly, D. Forrest Murray, Stephen Posner, Matthew Putnam, Adam Scanlan and Aaron Witham
Additional contact information
Joshua Farley: Department of Community Development and Applied Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Matthew Burke: Department of Community Development and Applied Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Gary Flomenhoft: Gund Institute for Ecological Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Brian Kelly: Department of Community Development and Applied Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
D. Forrest Murray: Gund Institute for Ecological Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Stephen Posner: Gund Institute for Ecological Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Matthew Putnam: Department of Community Development and Applied Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Adam Scanlan: Gund Institute for Ecological Economics, University of Vermont, 617 Main Street, Burlington, VT 05405, USA
Aaron Witham: Green Mountain College, One Brennan Circle, Poultney, VT 05764, USA

Sustainability, 2013, vol. 5, issue 6, 1-25

Abstract: Current macroeconomic policy promotes continuous economic growth. Unemployment, poverty and debt are associated with insufficient growth. Economic activity depends upon the transformation of natural materials, ultimately returning to the environment as waste. Current levels of economic throughput exceed the planet’s carrying capacity. As a result of poorly constructed economic institutions, society faces the unacceptable choice between ecological catastrophe and human misery. A transition to a steady-state economy is required, characterized by a rate of throughput compatible with planetary boundaries. This paper contributes to the development of a steady-state economy by addressing US monetary and fiscal policies. A steady-state monetary policy would support counter-cyclical, debt-free vertical money creation through the public sector, in ways that contribute to sustainable well-being. The implication for a steady-state fiscal policy is that any lending or spending requires a careful balance of recovery of money, not as a means of revenue, but as an economic imperative to meet monetary policy goals. A steady-state fiscal policy would prioritize targeted public goods investments, taxation of ecological “bads” and economic rent and implementation of progressive tax structures. Institutional innovations are considered, including common asset trusts, to regulate throughput, and a public monetary trust, to strictly regulate money supply.

Keywords: monetary; fiscal; public; policy; steady-state; ecological; biophysical; macroeconomics; money; debt (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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