The role of interest in the unsustainability of growth : analytical findings using an accounting model
van den Bergh, Jeroen C. J. M (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)
Savin, Ivan (Universitat Autònoma de Barcelona. Institut de Ciència i Tecnologia Ambientals)

Data:	2023
Resum:	In the context of the long-standing debate on growth-versus-environment, notably the possibility that serious environmental policies will slow down growth, the question has been raised if interest can be compatible with zero growth. We develop a simple accounting model that describes the value added of the financial sector being positively associated with interest income. This allows us to derive formally that interest is compatible with zero growth for both simple and compound interest. The findings indicate that on its own, interest or compound interest does not add to the growth of gross domestic product (GDP). What matters instead is whether savings - be it from interest or other income - are invested productively or not. In other words, the condition for non-growth is that interest income is either directly spent by the creditor or indirectly by the debtor, rather than being invested in capital expansion, education, or innovation. Such investments would result in a more productive economy generating economic growth. These findings generalize, and add transparency to, previous studies which used more complicated models involving particular theoretical assumptions about the functioning of the macroeconomy.
Ajuts:	Ministerio de Ciencia e Innovación CEX2019-000940-M
Nota:	Unidad de excelencia María de Maeztu CEX2019-000940-M
Drets:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original.
Llengua:	Anglès
Document:	Article ; recerca ; Versió publicada
Matèria:	Interest ; Limits to growth ; Post-growth ; Steady-state economy ; Environment
Publicat a:	Sustainability: Science, Practice and Policy, Vol. 19, Issue 1 (October 2023) , art. 2262830, ISSN 1548-7733

DOI: 10.1080/15487733.2023.2262830

8 p, 1.3 MB

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Documents de recerca > Documents dels grups de recerca de la UAB > Centres i grups de recerca (producció científica) > Ciències > Institut de Ciència i Tecnologia Ambientals (ICTA) > Environmental and Climate Economics (ECE)
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