A Kaleckian Model for Economy-Environment Analysis

Abstract

In this chapter, we develop a model for analyzing the economic impact of environmental measures by incorporating environmental costs into the Kaleckian model. The model is composed of equations explaining profit rate, savings, investment, and import and export by using variables such as capacity utilization rate, profit share, and environmental-measure cost. By analyzing this model with a focus on changes in capacity utilization and profit rate, it is shown that an increase in environmental-measure cost can lead to higher capacity utilization and profit rates under certain conditions.