Keywords: environmental capital, capital depreciation, internalisation, macroeconomics, capacity constraints, economic growth, economic performance, productive capacity, Australia, Korea, USA, United States, macroeconomic policy, policy analysis
Environmental capacity constraints in macroeconomic policy analysis
This paper deals with the conceptualisation of environmental capital (KN) as an explicit argument in frameworks that exposit economic growth and performance. The omission of KN represents a major flaw in macroeconomic policy analysis because the recognition of KN affects the determination of productive capacity. Empirical illustrations are offered with reference to Australia, Korea and the USA. In the case of the Australian economy, policy decisions are possibly being evaluated on income domains that exceed the productive capacity dictated by KN.