Gesellschaftliche Akzeptanz von Klimaschutzmaßnahmen: Erste Einblicke in die Ergebnisse

Linus Eckert, Benjamin Schemel, Sigrid Stagl #47.

Abstract

In diesem Working Paper werden die Ergebnisse einer in Österreich bundesweit durchgeführten Studie zur gesellschaftlichen Akzeptanz von Klimaschutzmaßnahmen vorgestellt. Die Ergebnisse zeigen, dass die österreichische Bevölkerung generell sehr positiv zu Klimaschutzmaßnahmen eingestellt ist. 24 der 27 abgefragten Klimaschutzmaßnahmen zeigen im Ergebnis in der bundesweiten Bevölkerung mehr Unterstützung als Widerstand. Die befragten Klimaschutzmaßnahmen wurden in einem vorigen Projektschritt im Auftrag des Bundesministeriums für Klimaschutz im Rahmen des Nationalen Energie und Klimaplans identifiziert.

Investigating social inequality of urban green space distribution using Sentinel-2: the case of Vienna

Lorenz Wimmer, Victor Maus, Sebastian Luckeneder #46.

Abstract

Urban green space (UGS) is known to provide several benefits for the local population, including regulating local climate and improving human health. The inequality hypothesis claims that these environmental amenities are unequally distributed across space and among different social groups. We propose using a continuous vegetation index derived from satellite imagery to investigate environmental inequality (EI) in UGS distribution. We used spatial autoregressive models to describe the relationship between the normalized difference vegetation index (NDVI) and socioeconomic variables in a case study on the city of Vienna at an unprecedented level of detail (250 m resolution). We show statistically significant evidence for the existence of EI in Vienna. Neighborhoods with a higher share of foreigners have significantly less UGS. Results are robust across spatial aggregation levels and alternative spatial and non-spatial model specifications. We find that our model outperforms alternative ground measure for UGS, as NDVI does not cluster around extreme values. We demonstrate the potential of satellite imagery to investigate complex social problems related to EI in urban areas.

Intangible assets, the digitalization of production and the development - energy nexus

Steven Knauss #45

Abstract

Initially based in the ICT sector, technologies based on intangible assets have since generalized throughout the economy and are playing a central role in the digitalization of manufacturing. As global value chains (GVCs) potentially bring such changes to developing countries, hopes are raised for “sustainable industrialization,” where the greater scalability, spillovers and synergies engendered by intangible assets could favor more rapid economic upgrading while at the same time unleashing significant gains in energy efficiency. To better assess the plausibility of such projections, this paper conducts a cross-country panel study of GVCs in 30 sectors and 67 countries between 1995 and 2018. The link is explored between the intangible asset intensity of GVCs and each of the two pillars of sustainable industrialization: energy efficiency and developing country upgrading. The results find little evidence for the optimistic view, suggesting that intangible spillovers in GVCs may be limited by winner take most dynamics and tendencies toward intellectual property monopolies. The path toward sustainable structural transformation in developing economies is therefore likely to require more active forms of industrial policy and a financial architecture that favors them.

(De)valuation of household cleaning in the platform economy

Katarzyna Gruszka, Anna Pillinger, Stefanie Gerold, Hendrik Theine #44.

Abstract

The division of paid and unpaid work fostered by the industrial revolution resulted in the devaluation of domestic work, including cleaning. Taking place behind closed doors renders this kind of work largely invisible. The arrival of platforms in this sector provides a novel possibility to explore the (de)valuation of household cleaning. Building on the literature on platform labor, we identify three “sites of valuation” and explore these in the case of the major platform operating in this field in Germany: Helpling. By means of the walkthrough method, we collect data from i) the Helpling webpage and infrastructure; ii) client reviews; and iii) cleaner profiles, and analyze the material with a grounded theory approach. We outline what these sites allow us to see about “good cleaning” or “good cleaners”, thereby unfolding how the infrastructure and the worker-client relationship are co-constructed. We argue that the digital infrastructure of platforms makes aspects of valuation of household cleaning visible, some of which have otherwise been hidden behind closed doors, such as affective labor, trust, or safety. The emerging picture leaves little prospect for digital platforms to foster actual valuation and appreciation of historically devalued domestic work such as cleaning. This would require, for example, improved working conditions – which would entail a fundamentally different business model underlying platform companies and altered regulatory frameworks. We stress here that it would also require active contribution of platforms to redefine the appreciation for and the recognition of cleaning (and other domestic work) in social-cultural terms.

Looking for growth imperatives under capitalism: money, wage labour, and market exchange

Louison Cahen-Fourot #43.

Abstract

First, I update and wrap up the discussion on a monetary growth imperative, namely the argument that debt-money bearing interest triggers real GDP growth. I provide a detailed account of the different versions of the argument and show why none of them hold. In all cases, the argument is shown to be inconsistent in macro-accounting terms or to be at odds with the functioning of the monetary system. The general solution to the monetary growth imperative is that a sufficient share of wealth must be put back in circulation, for example via higher consumption out of wealth or taxation. Moreover, I show that a monetary growth imperative could equally well occur in an economy without debt-money or interest. However, the solution to the monetary growth imperative entails a sustainability paradox: more wealth put back in circulation allows to reach a stable full stationary state but may be environmentally unsustainable. I also highlight convergences between the critique of the monetary growth imperative and the monetary circuit literature. Second, I address the criticism that no net wealth accumulation is unrealistic. It requires to explain why there is accumulation in the first place. Building from post-Keynesian and institutionalist perspectives, I argue that we need to locate the analysis at the level of the definitional social relations of capitalism: market exchange and wage labour. Growth imperatives are emerging properties of these two social relations. I develop a critique of steady state economics and underline the ontological difference between a zero-growth capitalism and a post-growth economy.

Ecologically unequal exchange and uneven development patterns along global value chains

Jeff Althouse, Bruno Carballa Smichowski, Louison Cahen-Fourot, Cédric Durand, Steven Knauss #42.

Abstract

The ecologically unequal exchange (EUE) literature has provided ample empirical evidence for asymmetric transfer of material and energy resources from low-income to high-income countries. However, research has not been able to clearly specify the causal mechanisms driving these processes. This paper relates participation in global value chains (GVCs) to development patterns and ecologically unequal exchange. We conduct a principal components analysis and a clustering analysis along six dimensions (GVC participation, GVC value capture, investment, socioeconomic development, domestic environmental impact and international environmental balance) for 133 countries between 1995 and 2015. We find three social, ecological, productive development and GVC insertion patterns: “curse of GVC marginalization”, “ecologically perverse upgrading” and “reproduction of the core”. While our results confirm the asymmetry in ecological degradation between high-income and low-income economies shown by EUE, they support the existence of alternative mechanisms to account for it. We argue that environmental asymmetries are driven in large part by differences in how countries articulate within GVCs, and therefore cannot be ascribed to relations of ecologically unequal exchange, alone. Countries with a higher capacity to capture value from GVC participation (“reproduction of the core”) are able to displace environmental impacts to countries facing a trade-off between the positive socio-economic impacts of rapid GVC integration and ecological degradation (“ecologically perverse upgrading”). GVC marginalization, in turn, constitutes a barrier to socio-economic benefits and to imported ecological degradation. However, the lack of diffusion of more ecologically-efficient processes through GVCs has a negative impact on domestic ecological degradation for countries of the “curse of GVC marginalization” group.

The global carbon footprint of Austria's consumption of agricultural (food and non-food) products

Verena Frey, Martin Bruckner #41.

Abstract

Agricultural production is one of the largest contributors to global greenhouse gas emissions. High-income countries like Austria source large quantities of feed, food and nonfood crops abroad thereby outsourcing emissions. Understanding global supply chains and geographical patterns of the trade with agricultural products is crucial for taking on responsibility for consumption-based emissions arising in other world regions. This study investigates Austria’s carbon footprint capturing all emissions from global agriculture associated with the consumption of food and non-food products. The analysis gives detailed insights into the contribution of various products and product categories, countries and regions, and carbon emitting processes across global supply chains, while comprehensively capturing all products consumed in Austria including their upstream emissions. The results show that while emission sources vary considerably for different consumption products, animal-based products account for the major part of emissions across the source regions. About 64% of Austrian emissions related to Austria’s carbon footprint of food products occur outside Austrian borders. Most emissions origin in Austria itself (36%), the rest of Europe (22%) and Asia (19%) and Latin America (14%). More than two thirds of emissions are related to the consumption of meat and other animal-based products. The results show the importance of consumption patterns, especially of meat and other animal products, for the Austrian footprint, which implies a great reduction potential through alternative diets and indicates clear limitations for emission mitigation strategies that instead focus on production efficiency.

Central banking for a social-ecological transformation

Louison Cahen-Fourot #40.

Abstract

In the perspective of a social-ecological transformation, this article sets the discussion on the future of central banking back in the context of ecological limits to growth. It first surveys the literature on proposals to introduce sustainability in central banking. It then draws from the conceptualization of money as a social relation to discuss central banks’ mandates, independence, governance and instruments. This article therefore adopts a normative stance. Central banks should be politically accountable with a renewed governance and committees composition. In line with the endogenous nature of money, their mandate needs not to include price stability and should focus on fostering full employment, social cohesion and relevant economic development within the ecological limits of the planet. Three policy instruments are then discussed to shift the nature of central banks’ operations responsive to prescriptive: differentiated target interest rates, credit control and qualitative tightening in assets purchasing programs.

Capital stranding cascades: The impact of decarbonisation on productive asset utilisation

Louison Cahen-Fourot, Emanuele Campiglio, Antoine Godin, Eric Kemp-Benedict, Stefan Trsek #37.

Abstract

The aim of this article is to assess the exposure of economic systems to the risk of physical capital stranding following a reduction of fossil fuel production and use. We calculate cross-sectoral and cross-country ‘marginal stranding multipliers’ for 43 regions, and study how supply-side capital stranding might propagate via international production networks. We show how the fossil industry has the potential of creating significant stranding cascades affecting downstream sectors and the economic system as a whole. We then focus on cross-country stranding impacts and rank countries according to their external stranding potential and to their exposure to external strandingrisk. Finally, we analyse more in depth the origins and transmission channels of the stranding links affecting the most exposed countries (US, China and Germany). Our results confirm the relevance of including multi-regional production networks and physical capital stranding into the ongoing effort to assess the macro-financial implications of a low-carbon transition.

Plausible energy demand patterns in a growing global economy with climate policy

Gregor Semieniuk, Lance Taylor, Armon Rezai, Duncan Foley #39.

Reducing energy demand has become a key mechanism for limiting climate change, but practical problems with large energy savings in a growing global economy and, importantly, in its lower-income parts remain. Using new energy-GDP data, we show that adopting the same near-term low-energy growth trajectory in all regions in IPCC scenarios limiting global warming to 1.5°C presents an unresolved policy challenge. We discuss this challenge of combining energy demand reductions with robustincome growth for the 6.4 billion people in middle and low income countries in light of economic development’s reliance on industrialisation. Our results highlight the importance of addressing limits to energy demand reduction in integrated assessment modelling when regional economic development is powered by industrialization and instead exploring faster energy supply decarbonization. Insights from development economics and other disciplines could help generate plausible assumptions given the financial, investment and stability issues involved.

The PIOLab: Building global physical input-output tables in a virtual laboratory

Hanspeter Wieland, Manfred Lenzen, Arne Geschke, Jacob Fry, Dominik Wiedenhofer, Nina Eisenmenger, Johannes Schenk, Stefan Giljum #36.

Abstract

Informed environmental-economic policy decisions require a solid understanding of the economy’s biophysical basis. Global physical input-output tables ( gPIOTs) collate a vast array ofinformation on the world economy’s physical structure and its interdependence with the environment. However, building gPIOTs requires dealing with mismatched and incompleteprimary data with high uncertainties, which makes it a time-consuming and labor-intensive endeavor. We address this challenge by introducing the PIOLab: A virtual laboratory for building gPIOTs. It represents the newest branch of the Industrial Ecology virtual laboratory (IELab) concept, a cloud-computing platform and collaborative research environment through which participants can use each other’s resources to assemble individual input-output tables targeting specific research questions. To overcome the lack of primary data, the PIOLab builds extensively upon secondary data derived from a variety of models commonly used in Industrial Ecology. We use the case of global iron-steel supply chains to describe the architecture of the PIOLab and highlight its analytical capabilities. A major strength of the gPIOT is its ability to provide mass-balanced indicators on both apparent/direct and embodied/indirect flows, for regions and disaggregated economic sectors. We present the first gPIOTs for 10 years (2008-2017), covering32 regions, 30 processes and 39 types of iron/steel flows. Diagnostic tests of the data reconciliation show a good level of adherence between raw data and the values realized in the gPIOT. We conclude with elaborating on how the PIOLab will be extended to cover other materials and energyflows.

Typologies of "Just Transitions": Towards Social-Ecological Transformation

Halliki Kreinin #35.

Abstract

The "Just Transition" (JT) approach emerged as an answer to balancing human welfare, jobs and the need for deep decarbonisation. The concept was developed by trade unions in the industrialised world as a unifying rallying cry around the demand that ecological transformation be undertaken in a socially just way. Starting out in the US in the 1970s, it has increasingly been adopted and adapted by different groups, including unions and workers themselves, environmentalists, academics, governments, international institutions and nongovernmental organisations. While the flexibility of the concept and the easy translatability of “fairness” have arguably been its strength and the reason for its popularity, JT has also been criticised for its vagueness, inoperability in practice, and in particular for being used to fight for various, and sometimes antithetical, conceptualisations of justice. Without negating the political challenges of JTs, this paper will look at divergent types of current formulations of JT, within a modified framework of Hampton’s (2015) trade union climate approaches, which includes 1) "neoliberal political economy/market" (NPE), 2) "ecological modernisation/state" (EM), and 3) "social-ecological transformation" (SET) climate approaches. Different JT approaches are aligned along "Market Policies" and "Just Transition" axes (Figure 1) of which NPE and SET form two extreme approaches. This paper will elaborate on why a radical SET formulation of JT, which moves past only class-based climate approaches (Hampton’s (2015) Marxist Political Economy) to include broader critiques based on environmental justice, degrowth and ecofeminism, is needed to adequately challenge current multiple crises related to the environment and society.

Matter and regulation: socio-metabolic and accumulation regimes of French capitalism since 1948

Louison Cahen-Fourot Nelo Magalhães #34.

Abstract

This paper aims at integrating macroeconomic and institutional analyses of long run dynamics of capitalism with material flow analysis. We investigate the links between accumulation and socio-metabolic regimes by studying French capitalism from a material perspective since 1948. We characterize its social metabolism both in production- and consumption-based approaches. We show that the periodization of accumulation regimes in terms of Fordism and Neoliberalism translates into material terms. The offshore materiality of Neoliberalism partly substitutes for and partly complements the more domestic materiality inherited from Fordism. The transition phase between the two socio-metabolic regimes clearly corresponds to the emergence of the offshoring-financialization nexus of French capitalism indicating the shift from the fordist accumulation regime to the neoliberal accumulation regime. Acknowledging that socio-metabolic regimes have their own logic, we highlight strong inter-linkages between accumulation and material dynamics and discuss how materials may be instrumental in shaping accumulation regimes. This work therefore illustrates the relevance of combining institutional macroeconomics with methods and approaches derived from Ecological Economics.

Labour markets in a Post-Keynesian growth model: the effects of endogenous productivity growth and working time reduction

Stefan Ederer, Armon Rezai #33.

Abstract

We study endogenous employment and distribution dynamics in a Post-Keynesian model of Kalecki-Steindl tradition. Productivity adjustments stabilize employment and the labour share in the long run: technological change allows firms to replenish the reserve army of workers in struggle over income shares and thereby keep wage demands in check. We discuss stability conditions and the equilibrium dynamics. This allows us to study how legal working time and its reduction affect the equilibrium. We find that a demand shock is likely to lower the profit share and increase the employment rate. A supply shock in contrast tends to have detrimental effects on employment and income distribution. Labour market institutions and a working time reduction have no long-term effect on growth, distribution and inflation in the model. The effects on the level of capital stock and output however are positive in a wage-led demand regime. Furthermore, an erosion of labour market institutions dampens inflation temporarily. The model provides possible explanations as to the causes of several current economic phenomena such as secular stagnation, digitalisation, and the break-down of the Philips curve.

Unveiling Drivers of Deforestation: Evidence from the Brazilian Amazon

Nikolas Kuschnig, Jesús Crespo Cuaresma, Tamás Krisztin, Stefan Giljum #32n.

Abstract

Deforestation of the Amazon rainforest is a threat to global climate, biodiversity, and many other ecosystem services. In order to address this threat, an understanding of the drivers of deforestation processes is required. Indirect impacts and determinants that eventually differ across locations and over time are important factors in these processes. These are largely disregarded in applied research and thus in the design of evidence-based policies. In this study, we employ a flexible modelling framework to gain more accurate quantitative insights into the complexities of deforestation phenomena. We investigate the impacts of agriculture in Mato Grosso, Brazil, for the period 2006-2017 and explicitly consider spatial spillovers and varying impacts over time and space. Spillover effects from croplands in the Amazon appear as the major driver of deforestation, with no direct effects from agriculture in later years. This suggests moderate success of the Soy Moratorium and Cattle Agreements, but highlights their inability to address indirect effects. We find that neglect of spatial dynamics and the assumption of homogeneous impacts leads to distorted inference. Researchers need to be aware of the complex and dynamic processes behind deforestation, in order to facilitate effective policy design.

Towards a comprehensive framework of the relationships between resource footprints, quality of life and economic development

Stefan Cibulka, Stefan Giljum #31.

Abstract

The relationship between economic affluence, quality of life and environmental implications of production and consumption activities is a recurring issue in sustainability discussions. A number of studies examined selected relationships, but the general implications for future development directions of countries at different development stages are hardly addressed. In this paper, we use a global dataset with 173 countries to assess the overall relationship between resource footprints, quality of life and economic development over the period of 1990-2015. We select the Material Footprint and Carbon Footprint and contrast them with the Human Development Index, the Happiness Index and GDP per capita. Regression analyses show that the relationship between various resource footprints and quality of life generally follows a logarithmic path of development, while resource footprints and GDP per capita are linearly connected. From the empirical results, we derive a generalised path of development and cluster countries along this path. Within this comprehensive framework, we discuss options to change the path to respect planetary and social boundaries through a combination of resource efficiency increases, substitution of industries and sufficiency of consumption. We conclude that decoupling and green growth will not realise sustainable development, if planetary boundaries have already been transgressed.

Wealth inequality and aggregate demand

Stefan Ederer, Miriam Rehm #30.

Abstract

The paper investigates how including the distribution of wealth changes the demand effects of redistributing functional income. It develops a model with an endogenous wealth distribution and shows that the endogenous rise in wealth inequality resulting from a redistribution towards profits weakens the growth effects of this redistribution. Consequently, a wage-led regime becomes more strongly wage-led. A profit-led regime on the other hand becomes less profit-led and there may even be a regime switch - in this case the short-run profit-led economy becomes wage-led in the long run due to the endogenous effects of wealth inequality. The paper thereby provides a possible explanation for the instability of demand regimes over time.

Rich and Ever Richer: Differential Returns Across Socio-Economic Groups

Stefan Ederer, Maximilian Mayerhofer, Miriam Rehm #29.

Abstract

This paper estimates rates of return across the gross wealth distribution in eight European countries. Like differential saving rates, differential rates of return matter for Post Keynesian theory, because they impact the income and wealth distribution and add an explosive element to growth models. We show that differential rates of return matter empirically by merging data on household balance sheets with long-run returns for individual asset categories. We find that (1) the composition of wealth differentiates between three socioeconomic groups: 30% are asset-poor, 65% are middle-class home owners, and the top 5% are business-owning capitalists; (2) rates of return rise across all groups; and (3) rates of return broadly follow a log-shaped function across the distribution, where inequality in the lower half of the distribution is higher than in the upper half. If socioeconomic groups are collapsed into the bottom 95% workers and top 5% capitalists, then rates of return are 5.6% for the former and 7.2% for the latter.

Do mining activities foster regional development? Evidence from Latin America in a spatial econometric framework

Sebastian Luckeneder, Stefan Giljum, Tamás Krisztin #28.

Abstract

Against the backdrop of steadily increasing global raw material demand, the socio-economic implications of metal ore extraction in developing countries are of major interest in academic and policy debates. This work investigates whether mining activities relate to the economic performance of mining regions and their surrounding areas. Usually, subnational impact assessments of mining activities are conducted in the form of qualitative in-field case studies and focus on a smaller sample of mining properties and regions. In contrast, we exploit a panel of 32 Mexican, 24 Peruvian and 16 Chilean regions over the period 2008 - 2015 and, in doing so, relate mine-specific data on extraction intensity to regional economic impacts. The study employs a Spatial Durbin Model (SDM) with heteroskedastic errors to provide a flexible econometric framework to measure the impact of natural resource extraction. The results suggest that mining intensity does not significantly affect regional economic growth in both short-run and medium-run growth models. Popular arguments of the mining industry that the extractive sector would trigger positive impulses for regional economic development cannot be verified. Rather, the findings support narratives that mining regions do not benefit from their wealth in natural resources due to low labour intensity, loose links to local suppliers and profit outflows.

FABIO - The Construction of the Food and Agriculture Biomass Input-Output Model

Martin Bruckner, Richard Wood, Daniel Moran, Nikolas Kuschnig, Hanspeter Wieland, Victor Maus, Jan Börner #27.

Abstract

Primary crops are linked to final consumption by networks of processes and actors that convert and distribute food and non-food goods. Achieving a sustainable metabolism of this bio-economy is an overarching challenge which manifests itself in a number of the UN Sustainable Development Goals. Modelling the physical dimensions of biomass conversion and distribution networks is essential to understanding the characteristics, drivers and dynamics of our societies' biomass metabolism. In this paper, we present the Food and Agriculture Biomass Input-Output model (FABIO), a set of multi-regional supply, use and input-output tables in physical units, that document the complex flows of agricultural and food products in the global economy. The model assembles FAOSTAT statistics reporting crop production, trade, and utilisation in physical units, supplemented by data on technical and metabolic conversion efficiencies, into a consistent, balanced, input-output framework. FABIO covers 191 countries and 130 agriculture, food and forestry products from 1986 to 2013. The physical supply-use tables offered by FABIO provide a comprehensive, transparent and flexible structure for organising data representing flows of materials within metabolic networks. They allow tracing biomass flows and embodied environmental pressures along global supply chains at an unprecedented level of product and country detail and can help to answer a range of questions regarding environment, agriculture, and trade.

The social relation to the environment in contemporary capitalism: theoretical reflections and empirical explorations

Louison Cahen-Fourot #26.

Abstract

This paper analyses the socio-economic context into which environmental policies and ecological sentiments emerge through empirically studying the relation to the environment of different kinds of capitalism. The association and interaction of the relation to the environment with other key social relations, e.g. the labour-capital relations, are studied and discussed. To achieve this, I draw from Regulation Theory and augment its analytical framework with an explicit environmental dimension. I then conduct an empirical analysis of the diversity of contemporary capitalism including the social relation to the environment for a sample of thirty-seven OECD and BRICS countries. Five kinds of capitalism are identified: the Northern-continental European, the Southern-central European, the Anglo-Saxon and Pacific, the Emerging Countries and the Two Giants. A main result is the correspondence between ecology-prone social relations to the environment, labour oriented capital-labour relations and welfare-oriented states. However, the results show that countries that are the most ecology-prone are also the ones that have the most relocated their environmental impact, an observation consistent with the critical literature on the Environmental Kuznets Curve.

Looking for the inverted pyramid: An application using input-output networks

Louison Cahen-Fourot, Emanuele Campiglio, Elena Dawkins, Antoine Godin, Eric Kemp-Benedict #25.

Abstract

Herman Daly's view of the economy as an "inverted pyramid" sitting on top of essential raw material inputs is compelling, but not readily visible in monetary data, as the contribution of primary sectors to value added is typically low. This article argues that "forward linkages", a classical development theory concept capturing the relevance of a sector for downstream activities, is a more appropriate measure to identify key sectors. Using Input-Output (IO) data from eighteen European countries, we identify mining as the sector with the highest average forward linkages, and confirm the consistency of this result across countries via cluster analysis. By treating IO tables as the adjacency matrix of a directed network, we then build and visualise national inverted pyramid networks, and analyse their structure. Our approach highlights the key importance of natural resources in providing the necessary inputs to modern European economies.

Natural Disasters, Cascading Losses, and Economic Complexity: A Multi-layer Behavioral Network Approach

Asjad Naqvi, Irene Monasterolo #24.

Abstract

Assessing the short-term socio-economic impacts of climate-led disasters on food trade networks requires new bottom-up models and vulnerability metrics rooted in complexity theory. Indeed, such shocks could generate cascading socio-economic losses across the networks layers where emerging agents¿ responses could trigger tipping points. We contribute to address this research gap by developing a multi-layer behavioral network methodology composed of multiple spatially-explicit layers populated by heterogeneous interacting agents. Then, by introducing a new multi-layer risk measure called vulnerability rank, or VRank, we quantify the stress in the aftermath of a shock. Our approach allows us to analyze both the supply- and the demand-side dimensions of the shock by quantifying short-term behavioral responses, the transmission channels across the layers, the conditions for reaching tipping points, and the feedback on macroeconomic indicators. By simulating a stylized two-layer supply-side production and demand-side household network model we find that, (i) socio-economic vulnerability to climate-led disasters is cyclical, (ii) the distribution of shocks depends critically on the network structure, and on the speed of supply-side and demand-side responses. Our results suggest that such a multi-layer framework could provide a comprehensive picture of how climate-led shocks cascade and how indirect losses can be measured. This is crucial to inform effective post-disaster policies aimed to build food trade network resilience to climate-led shocks, in particular in more agriculture-dependent bread-basket regions.

Climate Transition Risk, Climate Sentiments, and Financial Stability in a Stock-Flow Consistent approach

Nepomuk Dunz, Asjad Naqvi, Irene Monasterolo #23.

Abstract

It is increasingly recognized that banks might not be pricing adequately climate risks in the value of their loans contracts. This represents a barrier to scale up the green investments needed to align the economy to sustainability and to preserve financial stability. To overcome this barrier, climate-aligned policies, such as a revision of the microprudential banking framework (for example a Green Supporting Factor (GSF)), and the introduction of stable green fiscal policies (for example a Carbon Tax (CT)), have been advocated. However, understanding the conditions under which a GSF or a CT could represent an opportunity for scaling up green investments, while preventing trade-offs on risk for financial stability, is still insufficient. We contribute to fill this knowledge gap threefold. First, we analyse the risk transmission channels from climate-aligned policies, a GSF and a CT, to the credit market and the real economy via loans contracts. Second, we assess the reinforcing feedbacks leading to cascading macro-financial shocks. Third, we consider how banks could react to the policies, i.e., their climate sentiments. In this regard, we embed for the first- time banks climate sentiments, modelled as a non-linear adaptive forecasting function into a Stock-Flow Consistent model that represents agents and sectors of the real economy and the credit market as a network of interconnected balance sheets. Our results suggest that the GSF is not sufficient to effectively scale up green investments via a change in lending conditions to green firms. In contrast, the CT could shift the bank's loans and the green/brown firms' investments towards the green sector. Nevertheless, it could imply short-term negative transition effects on GDP growth and financial stability, according to how the policy is implemented. Finally, our results show that bank's anticipation of a climate-aligned policy, through stronger climate sentiments, could smooth the risk for financial stability and foster green investments. Thus, our results contribute to understand the conditions for the onset and the mitigation of climate-related financial risks and opportunities.

Capital stranding cascades: The impact of decarbonisation on productive asset utilisation

Louison Cahen-Fourot, Emanuele Campiglio, Elena Dawkins, Antoine Godin, Eric Kemp-Benedict # 18.

Abstract

This article develops a novel methodological framework to investigate the exposure of economic systems to the risk of physical capital stranding. Combining Input-Output (IO) and network theory, we define measures to identify both the sectors likely to trigger relevant capital stranding cascades and those most exposed to capital stranding risk. We show how, in a sample of ten European countries, mining is among the sectors with the highest external asset stranding multipliers. The sectors most affected by capital stranding triggered by decarbonisation include electricity and gas; coke and refined petroleum products; basic metals; and transportation. From these sectors, stranding would frequently cascade down to chemicals; metal products; motor vehicles water and waste services; wholesale and retail trade; and public administration. Finally, we provide an estimate for the lower-bound amount of assets at risk of transition-related stranding, which is in the range of 0.6-8.2% of the overall productive capital stock for our sample of countries, mainly concentrated in the electricity and gas sector, manufacturing, and mining. These results confirm the systemic relevance of transition-related risks on European societies.

The simple arithmetic of carbon pricing and stranded assets

Frederick van der Ploeg, Armon Rezai #22.

Abstract

A simple rule for the optimal global price of carbon is presented, which captures the geo-physical, economic, and ethical drivers of climate policy as well as the effect of uncertainty about future growth of consumption. There is also a discussion of the optimal carbon budget and the amount of unburnable carbon and stranded fossil fuel reserves and a back-on-the-envelope expression are given for calculating these. It is also shown how one can derive the end of the carbon era and peak warming. This simple arithmetic for determining climate policy is meant to complement the simulations of large-scale integrated assessment model, and to give analytical understanding of the key determinants of climate policy. The simple rules perform very well in a full integrated assessment model. It is also shown how to take account of a 2 °C upper limit on global warming. Steady increases in the efficiency of labour do not affect the optimal price of carbon or the safe carbon budget, but do postpone the carbon-free era.

The Agnostic's Response to Climate Deniers: Price Carbon!

Frederick van der Ploeg, Armon Rezai #21.

Abstract

With the election of President Trump, climate deniers feel emboldened and moved from the fringes to the centre of global policy making. We study how an agnostic approach to policy, based on Pascal's wager and allowing for subjective prior probability beliefs about whether climate deniers are right, prices carbon. Using the DICE integrated assessment model, we find that assigning a 10% chance of climate deniers being correct lowers the global price on carbon in 2020 only marginally: from $21 to $19 per ton of carbon dioxide if policymakers apply "Nordhaus discounting" and from $91 to $84 per ton of carbon dioxide if they apply "Stern discounting". Agnostics' reflection of remaining scientific uncertainty leaves climate policy essentially unchanged. The robustness of an ambitious climate policy also follows from using the max-min or the min-max regret principle. Letting the coefficient of relative ambiguity aversion vary from zero, corresponding to expected utility analysis, to infinity, corresponding to the max-min principle, we show how policy makers deal with fundamental climate model uncertainty if they are prepared to assign prior probabilities to different views of the world being correct. Allowing for an ethical discount rate and a higher market discount rate and for a wide range of sensitivity exercises including damage uncertainty, we show that pricing carbon is the robust response under rising climate scepticism.

Demand Drives Growth all the Way

Lance Taylor, Duncan K. Foley, Armon Rezai #20.

Abstract

A demand-driven alternative to the conventional Solow-Swan growth model is analyzed. Its medium run is built around Marx-Goodwin cycles of demand and distribution. Long-run income and wealth distributions follow rules of accumulation stated by Pasinetti in combination with a technical progress function for labor productivity growth incorporating a Kaldor effect and induced innovation. An explicit steady state solution is presented along with analysis of dynamics. When wage income of capitalist households is introduced, the Samuelson-Modigliani steady state "dual" to Pasinetti's cannot be stable. Numerical simulation loosely based on US data suggests that the long-run growth rate is around two percent per year and that the capitalist share of wealth may rise from about forty to seventy percent due to positive medium-term feedback of higher wealth inequality into its own growth.

Simple rules for climate policy and integrated assessment

Frederick van der Ploeg, Armon Rezai #19.

Abstract

A simple integrated assessment framework that gives rules for the optimal carbon price, transition to the carbon-free era and stranded carbon assets is presented, which highlights the ethical, economic, geophysical and political drivers of optimal climate policy. For the ethics we discuss the role of intergenerational inequality aversion and the discount rate, where we show the importance of lower discount rates for appraisal of longer run benefit and of policy makers using lower discount rates than private agents. The economics depends on the costs and rates of technical progress in production of fossil fuel, its substitute renewable energies and sequestration. The geophysics depends on the permanent and transient components of atmospheric carbon and the relatively fast temperature response, and we allow for positive feedbacks. The politics stems from international free-rider problems in absence of a global climate deal. We show how results change if different assumptions are made about each of the drivers of climate policy. Our main objective is to offer an easy back-on-the-envelope analysis, which can be used for teaching and communication with policy makers.

The Euro, The Gold Standard, and German Power: A Cautionary Tale and the Lessons of History

Beverly CRAWFORD, Armon REZAI #38

Pundits around the world have criticized Germany for either trying to reshape Europe in its image or acting in its own self-interest. Germany has been accused of creating a new “empire,” of pursuing a new Sonderweg, of “going global alone,” of evasiveness, self-imposed isolation, and bullying. The U.S. Treasury and the International Monetary Fund (IMF) have accused Germany of pursuing “beggar-my-neighbor” policies with its trade surpluses that threaten the Eurozone and even the global economy. Germany protests that it did all it could to save the euro and is doing all it can to contribute to European economic health. Indeed, by 2017, the euro had survived. But, it survived at the expense of the societies and the economies of the Europe’s periphery and to the benefit of its core. As Mario Draghi’s quote above implies, a monetary union between a core and periphery cannot endure. We argue here that it can survive only if a liberal hegemon in Europe uses its resources to underwrite cooperation in the European Union (EU) by transferring resources from the core to stimulate growth in the periphery. That liberal hegemon should be Germany.

Economic Growth, Income Distribution, and Climate Change

Armon REZAI, Lance TAYLOR, Duncan FOLEY # 17.

Abstract

We present a model based on Keynesian aggregate demand and labor productivity growth to study how climate damage affects the long-run evolution of the economy. Climate change induced by greenhouse gas lowers profitability, reducing investment and cutting output in the short and long runs. Short-run employment falls due to deficient demand. In the long run productivity growth is slower, lowering potential income levels. Climate policy can increase incomes and employment in the short and long runs while a continuation of business-as-usual leads to a dystopian income distribution with affluence for few and high levels of unemployment for the rest.

Directed Technological Change in a post-Keynesian Ecological Macromodel

Asjad NAQVI, Engelbert STOCKHAMMER # 16.

Abstract

This paper presents a post-Keynesian ecological macro model that combines three strands of literature: the directed technological change mechanism developed in mainstream endogenous growth theory models, the ecological economic literature which highlights the role of green innovation and material flows, and the post-Keynesian school which provides a framework to deal with the demand side of the economy, financial flows, and inter- and intra-sectoral behavioral interactions. The model is stock-flow consistent and introduces research and development (R&D) as a component of GDP funded by private rm investment and public expenditure. The economy uses three complimentary inputs - Labor, Capital, and (non-renewable) Resources. Input productivities depend on R&D expenditures, which are determined by relative changes in their respective prices. Two policy experiments are tested; a Resource tax increase, and an increase in the share of public R&D on Resources. Model results show that policy instruments that are continually increased over a long-time horizon have better chances of achieving a "green" transition than one-off climate policy shocks to the system, that primarily have a short-run affect.

Six Dimensions of Concentration in Economics: Scientometric Evidence from a Large-Scale Data Set

Florentin GLÖTZL, Ernest AIGNER # 15.

Abstract

This paper scientometrically investigates concentration in economics between 1956and 2016 using a large-scale data set. It is revealed that economics is highly concentratedalong six dimensions: articles, journals, regions, institutions, authors, and paradigms. NorthAmerica accounts for half of all published articles and three quarters of all citations, while thetop twenty academic institutions reap a share of 42 percent of all citations. The top 100 authorsalone receive a share of 15 percent. Five journals account for 27.7 percent of all citations andonly 8 percent of all articles, and 3 percent of all citations may be attributed to heterodoxschools of thought. The overall Gini coefficient for the distribution of citations among articlesis 0.72. Generally, concentration is found to increase towards the top of the discipline and to behigher and more persistent on the level of citations than on the level of articles. Concentrationhas increased over the last few decades, with the strongest increases occurring already untilthe 1970s.

Appendix to "A Sectoral Net Lending Perspective on Europe"

Florentin GLOETZL, Armon REZAI # 14.

Abstract

This appendix contains supplementary material to the paper "A sectoral net lending perspective on Europe". It includes information on the data provenance and processing, the statistical and algebraic framework applied in the study as well as supplementary figures for all countries in the sample. Moreover, it provides robustness checks for the cyclicality analysis of sectoral net lending flows.

Carbon footprint decomposition in MRIO models: identifying EU supply-chain hot spots and their structural changes over time

Hanspeter WIELAND, Stefan GILJUM # 13.

Abstract

Politics’ demand for informative consumption-based emission assessments based on multi-regional inputoutput (MRIO) databases is steadily increasing. Based on the MRIO database EXIOBASE 3, we exemplifythe utility of a range of analytical tools and discus their potential insights for consumption-based policies.The analysis decomposes the overall EU carbon footprint into product groups as well as into emittingregions. Subsequently, we illustrate the potential of applying production layer decomposition (PLD) andstructural path analysis (SPA) for the assessment of global supply-chains related to the EU carbonfootprint and their structural changes over time. We close with some policy recommendations onreducing carbon footprint hot spots.(author's abstract)

A sectoral net lending perspective on Europe

Florentin GLÖTZL, Armon REZAI # 12.

Abstract

The paper investigates net lending and net borrowing flows of the institutional sectors in Europe since the introduction of the Euro in 1999. Applying a simple statistical apparatus, this paper is novel in describing the sectoral behavior leading up to and during the crisis. We find that (1) many countries of the Northern group were characterized by low public deficits or even budget surpluses, current account surpluses and a private sector in a net lending position. In countries of the Southern periphery, in the Anglo-Saxon countries as well as in many Eastern European Economies private sector net borrowing coincided with a budget deficit and substantial current account deficits. (2) With the onset of the crisis private net lending soared in all countries while all governments incurred deficits, consistent with the notion of a balance sheet recession. (3) Private net lending is pro-cyclical, reinforcing the economic downturn, while public net lending is countercyclical in all countries. (4) Household net lending tends to lead the business cycle, while corporate net lending tends to lag it especially in the Northern group. (5) Prominent concepts asserting causal relationships in sectoral net lending, such as Ricardian equivalence and the twin deficit hypothesis are not supported by the data. (author's abstract)

Framing the Collaborative Economy

Katarzyna GRUSZKA # 11.

Abstract

Within the context of multiple crises and change, a range of practices discussed under the umbrella term of collaborative (or sharing) economy have been gaining considerable attention. Supporters build an idealistic vision of collaborative societies. Critics have been stripping the concept of its visionary potential, questioning its revolutionary nature. In the study, these debates are brought down to the local level in search for common perceptions among the co-creators of the concept in Vienna, Austria. Towards this aim a Q study is conducted, i.e. a mixed method enabling analyses of subjective perceptions on socially contested topics. Four voices are identified: True Believers, Market Optimists, Dedicated Critics, and Healthy Sceptics, each bringing their values, visions, and practical goals characteristic of different understanding of the collaborative economy. The study questions the need for building a globally-applicable definition of the concept, calls for more context-sensitivity, and the need for further exploratory approaches. (author's abstract)

Demand and Distribution in Integrated Economies

Armon REZAI # 10.

Abstract

Aggregate demand is influenced by the functional income distribution of an economy and that of its trading partners. This relationship between income distribution and output is analyzed in a short-run two-country Neo-Kaleckian model. The effects of devaluation and redistribution are discussed in detail. Trade and redistribution within one country interact and output increases or decreases with changes in either depending on the specific distributional and exchange rate movements. The Marshall-Lerner condition is shown to be equivalent to the assumption of expansionary devaluation. If devaluation increases output, national redistribution policy toward wage earners is also more likely to be expansionary. (author's abstract)

Ecological Macreconomics: Introduction and Review

Armon REZAI, Sigrid STAGL # 9.

Abstract

The Great Recession of the past years has brought macroeconomics back. Many of the recession's phenomena, causes and consequences alike, cannot be understood using solely microeconomic decisionmaking. Over the past decades the economics profession has pursued the implications of rational choices and enshrined them in so-called "micro foundations" as a hallmark of modern economic theory. By focusing on the choices and actions of individual consumers, firms, or the government, however, one can easily miss important determinants of the economic system which only arise at the meso- or the macroeconomic levels where institutions, coordination, and complexity in general are important and sometimes even can take on a life of their own. To lesser extent, ecological economics has fallen prone to similar pitfalls by mostly focusing the unit of investigation on low-level, small-scale subsystems of the economy. There are, of course, notable exceptions including the early contributors Boulding and Georgescu-Roegen and the general interest of ecological economists in the field of (ecological) macroeconomics has been increasing. (authors' abstract)

Cumulative Emissions, Unburnable Fossil Fuel and the Optimal Carbon Tax

Armon REZAI, Frederick VAN DER PLOEG # 8.

Abstract

A new IAM is used to calculate the optimal tradeoff between, on the one hand,locking up fossil fuel and curbing global warming, and, on the other hand,sacrificing consumption now and in the near future. This IAM uses the Oxford carbon cycle, which differs from DICE, FUND and PAGE in that cumulative emissions are the key driving force of changes in temperature. We highlight how time impatience, intergenerational inequality aversion and expected trend growth affect the time paths of the optimal global carbon tax and the optimal amount of fossil fuel reserves to leave untapped. We also compare these with the adverse and deleterious global warming trajectories that occur if no policy actions are taken. (authors' abstract)

Changing the world one student at a time? Uncovering subjective understandings of economics instructor's roles

Katarzyna GRUSZKA, Annika SCHARBERT, Michael SODER # 7.

Abstract

In the wake of the economic crisis, a number of student organisations and researchers came together to highlight the lack of pluralism and heterodox approaches in economics curricula. The high relevance of the pluralism debate becomes clear once set within the considerations of the implications of a given scientific discourse on reality. This is especially relevant for social sciences, where reality-creating is visible in e.g. the influence of economists on policy making. This study explores the role of instructors in co-constructing the dynamics of the pluralism discourse and debates. An empirical field study is conducted with lecturers in introductory economics courses at the WU Vienna University of Economics and Business where they place themselves within the pluralism discourse via a Q-study. Q is a mixed method typically employed for studying subjectivity inherent to a given, socially contested topic. It begins with a set of statements that undergo a sorting procedure on a relative ranking scale, and finishes with factorrendering. Four voices are identified: Moderate Pluralist, Mainstreamers, Responsible Pluralists, and Applied Pluralists. The implications of the ideas brought by these voices are discussed from the point of view of discursive institutionalism, stressing in particular the role of ideas and discourse in institutional change. On top of what is here referred to as discursive readinesses for changes towards more pluralism, strategies for overcoming the difficulties on the institutional level need to be developed. (authors' abstract)

Wirtschaftswachstum und die funtkionale und persönliche Verteilung von Einkommen - Überblick und neue Erkenntnisse

Armon REZAI # 6.

Abstract

Dieser Beitrag gibt einen Überblick über wissenschaftlich untersuchte den Zusammenhänge zwischen funktionaler und persönlicher (Lohn)Einkommensverteilung, der aggregierten Nachfrage und dem Wirtschaftswachstum. Zudem werden die Ergebnisse einer ökonometrischen Schätzung dieses Zusammenhanges für die USA für die Jahre 1967 - 2010 präsentiert. Aus den theoretischen Überlegungen und empirischen Untersuchungen zeigt sich, dass eine ungleichere Verteilung von Lohneinkommen zu geringerem Wirtschaftswachstum führt und dass bei einer gleicheren Verteilung von Lohneinkommen die Umverteilung hin zu Löhnen generell wachstumsfördernd ist. (author's abstract)

Pluralism in the Market of Science? A citation network analyses of economic research at Universities in Vienna

Florentin GLÖTZL, Ernest AIGNER # 5.

Abstract

Pluralism has become a central issue not only in the public discourse but also in heterodox economics, as the focus on impact factors and rankings based on citations continues to increase. This marketization of science has been an institutional vehicle for the economic mainstream to promote its ideas. Citations thus have become a central currency in economics as a discipline. At the same time they allow to investigate patterns in the discourse. Analyzing articles published by the two major economics departments and the more interdisciplinary Department for Socioeconomics in Vienna, this paper is novel in applying both bibliometric techniques and citation network analysis on the department level. We find that (1) Articles in heterodox journals strongly reference the economic mainstream, while the mainstream does not cite heterodox journals, (2) Articles written by researchers of the Department of Socioeconomics cite more heterodox journals irrespective of whether they are published in mainstream or heterodox journals, (3) The economics departments display a citation network exhibiting a clear "mainstream core - heterodox periphery" structure, as Dobusch & Kapeller (2012b) suggest the overall discourse in economics to be, while the Department of Socioeconomics could be described as a plural though not pluralistic department with many distinct modules in the network , reflecting various disciplines, topics and schools of thought. (authors' abstract)

Work-sharing for a sustainable economy

Klara ZWICKL, Franziska DISSLBACHER, Sigrid STAGL # 4.

Abstract

Achieving low unemployment in an environment of weak growth is a major policy challenge; a more egalitarian distribution of hours worked could be the key to solving it. Whether worksharing actually increases employment, however, has been debated controversially. In this article we present stylized facts on the distribution of hours worked and discuss the role of work-sharing for a sustainable economy. Building on recent developments in labor market theory we review the determinants of working long hours and its effect on well-being. Finally, we survey work-sharing reforms in the past. While there seems to be a consensus that worksharing in the Great Depression in the U.S. and in the Great Recession in Europe was successful in reducing employment losses, perceptions of the work-sharing reforms implemented between the 1980s and early 2000s are more ambivalent. However, even the most critical evaluations of these reforms provide no credible evidence of negative employment effects; instead, the overall success of the policy seems to depend on the economic and institutional setting, as well as the specific details of its implementation. (authors' abstract)

An Integrated Approach to Climate Change, Income Distribution, Employment, and Economic Growth*

Lance TAYLOR, Armon REZAI, Duncan K. FOLEY # 3.

Abstract

A demand-driven growth model involving capital accumulation and the dynamics of greenhouse gas (GHG) concentration is set up to examine macroeconomic issues raised by global warming, e.g. effects on output and employment of rising levels of GHG; offsets by mitigation; relationships among energy use and labor productivity, income distribution, and growth; the economic significance of the Jevons and other paradoxes; sustainable consumption and possible reductions in employment; and sources of instability and cyclicality implicit in the twodimensional dynamical system. The emphasis is on the combination of biophysical limits and Post- Keynesian growth theory and the qualitative patterns of system adjustment and the dynamics that emerge.

Modeling, Growth, Distribution, and the Environment in a Stock-Flow consistent Framework

Syed Ali Asjad NAQVI # 2.

Abstract

Economic policy in the EU faces a trilemma of solving three challenges simultaneously - growth, distribution, and the environment. In order to assess policies that address these issues simultaneously, economic models need to account for both sector-sector and sector-environment feedbacks within a single framework.This paper presents a multi-sectoral stock-flow consistent (SFC) macro model where a demand-driven economy consisting of multiple institutional sectors - firms, energy, households, government, and financial - interacts with the environment. The model is calibrated for the EU region and five policy scenarios are evaluated; low consumption, a capital stock damage function, carbon taxes, higher share of renewable energy, and technological shocks to productivity. Policy outcomes are tracked on overall output, unemployment, income and income distributions, energy, and emission levels. Results show that investment in mitigation technologies allows for absolute decoupling and ensures that the above three issues can be solved simultaneously. (author's abstract)

Informal environmental regulation of industrial air pollution: Does neighborhood inequality matter?

Klara ZWICKL, Mathias MOSER # 1.

Abstract

This paper analyzes if neighborhood income inequality has an effect on informal regulation of environmental quality, using census tract - level data on industrial air pollution exposure from EPA's Risk Screening Environmental Indicators and income and demographic variables from the American Community Survey and EPA's Smart Location Database. Estimating a spatial lag model and controlling for formal regulation at the states level, we nd evidence that overall neighborhood inequality - as measured by the ratio between the fourth and the second income quintile or the neighborhood Gini coefficient - increases local air pollution exposure, whereas a concentration of top incomes reduces local exposure. The positive coefficient of the general inequality measure is driven by urban neighborhoods, whereas the negative coefficient of top incomes is stronger in rural areas. We explain these findings by two contradicting effects of inequality: On the one hand, overall inequality reduces collective action and thus the organizing capacities for environmental improvements. On the other hand, a concentration of income at the top enhances the ability of rich residents to negotiate with regulators or polluting plants in their vicinity. (authors' abstract)