Stabilization Policies and Technological Shocks: Towards a Sustainable Economic Growth Path

Anelí Bongers,Carmen Díaz-Roldán

doi:10.3390/su11010205

Anelí Bongers, Carmen Díaz-Roldán

Open Access

https://doi.org/10.3390/su11010205

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Abstract

The purpose of this paper is to explore the extent to which traditional economic policies can be oriented by sound practices. It is becoming widely accepted that sustainable economic growth (and not only economic growth) is the final target of economic policies, but some economic policies are applied just looking to the short-run without taking in account the long-run perspective. Our aim is to show how a sustainable economic policy-making would be possible, making compatible the stabilization of the economy in the short-run with a sustainable economic growth in the long-run. We confront the design of economic policies with the 17 goals of the 2030 Agenda. We argue that all sustainable development goals can be attained by the design and implementation of sustainable economic policies. Finally, to illustrate this point, we will conduct a simulation exercise to show under which combinations of demand policies technological shocks would promote a path of sustainable growth. Our results will provide a reference framework for a sustainable economic policy-making.

Highlights

Economic policies designed and implemented by the governments can have important consequences for social and economic dynamics both in the short and the long-run
It is becoming widely accepted that sustainable economic growth is the final target of economic policies
We argue that the “sustainability” perspective of economic policies must be considered as a key element when designing and implementing traditional economic policies, and that the final objective of economic policies is not economic growth, as it has been addressed in the past, but sustainability economic growth that entitles different social and environmental aspects that interact with economic growth

Summary

Introduction

Economic policies designed and implemented by the governments can have important consequences for social and economic dynamics both in the short and the long-run. A distinction has been made between short-run demand economic policies and long-run supply-side economic policies, as they pursue different direct goals. It is becoming widely accepted that sustainable economic growth (and economic growth) is the final target of economic policies (see for instance the final discussion in Reference [1], where the classical concerns about stabilization policies are conciliated with a flexible model of growth). Some economic policies are applied just looking to the short-run without taking in account the long-run perspective (some discussions on this can be found in Reference [2] and Reference [3], to name a few). For a broad comprehension of the most recent developments see Reference [8] and the papers included in the special issue

Objectives

Results

Conclusion