Economic sustainability how far should the

From where we stand now, the challenge is formidable. Estimates of energy return on energy invested EROI — the ratio of energy delivered to energy needed to deliver — illustrate how different the future is likely to be from the past.

Economic sustainability how far should the

These developments could be sources of renewed concerns about the trajectory of U. As shown by the dashed blue line in Figure 2, though, no corresponding ratcheting-up of concerns about the U.

On the other hand, as indicated by the black line, we do see a slight uptick in references to U. Our key finding is that there appears to be much less ground for being concerned about U. Intuitively, if this ratio were to keep getting more negative, debt service would eventually end up consuming all of GDP.

A positive current account surplus in a given year implies that a country has been a net lender to the rest of the world during that year so that, abstracting from valuation changes, its NIIP increases, whereas the reverse is true Economic sustainability how far should the a negative current account deficit.

Economic sustainability how far should the

Labelling the growth rate of GDP as g, we can write: Yet, as shown in Figure 2, concerns about U. Going back to Figure 1, we can see where these concerns were coming from--the current account deficit was rapidly expanding and the NIIP was deteriorating sharply.

More detail about that period can be found in Bertaut, Kamin, and Thomas Given that the necessary condition for NIIP stability is still far from holding, why have concerns about U.

Solving the economic sustainability problem

One reason is that the trade deficit the black line in Figure 3 has remained relatively stable in recent years, even following the sizable appreciation of the foreign exchange value of the dollar over and shown by the dashed blue line.

This, in turn, can be traced to a couple of important factors: First, oil imports have decreased as U. Second, imports more generally have been weak. The ratio of imports to GDP shown in Figure 5 has fallen despite the considerable dollar appreciation in part because the trade-sensitive components of domestic demand, such as equipment investment, were particularly weak in and Another reason for the relatively benign concerns about the U.

How is this possible? First, the stock of U. As such, with "low-for-long" interest rates and safe haven flows over the post-GFC period, U. Looking Ahead But what matters is where we are headed and whether the necessary condition for stability is going to be satisfied over the long run.

To assess this, we need a model and some baseline assumptions to put into the model to obtain the relevant projections. The USIT model consists of several hundred equations, including identities and many estimated behavioral equations pertaining to disaggregated trade flows components of imports and exportsnon-trade components of the current account including investment incomeand financing flows.

We use exogenous assumptions for the central determining factors in the equations of the USIT model to project U. For China, we extend the downward trend of the past ten years. The results of the model simulations are shown in Figures Under the baseline assumptions, in the near term the U.

Note that the situation is very different from what was being projected in see Bertaut, Kamin, and Thomas --when these external deficits were projected to continue to increase as a share of GDP.

At that time, interest rate and GDP growth projections for both the United States and our foreign trading partners were much higher. We also re-estimate the model periodically, and some of the estimated elasticities have also changed.

As shown in Figure 9, NII declines as interest rates rise reversing the trend when interest rates were fallingbut eventually stabilizes at about 0. The NIIP as a share of GDP Figure 10 continues to become more negative, but its deterioration slows as the current account deficit narrows, and it too eventually stabilizes, at a little over negative 40 percent of GDP.

This suggests external sustainability in the long run, unlike what we were projecting in Of course, assumptions matter.

What if interest rates were to rise more sharply over the next few years than we have assumed in our forecast — by another basis points byfor example?

Economic sustainability how far should the

In this case, NII would deteriorate more significantly but would stabilize at a level close to zero once interest rates peak.

The current account balance would still narrow, though the improvement would be delayed a couple more years, and the NIIP would stabilize at a slightly more negative level.

IFDP Notes

Assumptions on exchange rates also matter. For example, if the dollar were to resume appreciating, there would be more persistent pressures on the trade and current account deficits, NII would eventually become negative, and the NIIP would continue to deteriorate.Sustainability accounting (also known as social accounting, Energetic and innovative experimentation by far-sighted organisations state that sustainability aspects in accounting and reporting are The future direction of sustainability accounting and sustaining economic development should continue to display the essential quality of.

Nov 13,  · However, as the economy develops and grows further, socio-economic trends are shifting. The country's achievements so far in no way negate the environmental concerns it still faces. India and the world have a long and challenging way to go in dealing with environmental problems, and learning to live together in sustainable communities.

The central theme is best expressed in The Economics of Sustainability Issue Brief, which reviews the differences between traditional mainstream economic concepts and economic viewpoints that incorporate more conscientious stewardship of the "natural capital" which.

Whichever path we take, the first step to achieving any sort of balance between economic growth and sustainability is to put more weight on sustainability and less on economic growth.

We must stop procrastinating, stop pushing the problem to the next generation and then to . Should We Be Concerned Again About U.S. Current Account Sustainability? we do see a slight uptick in references to U.S. "twin deficits" so far this year, though the frequency remains well below that of we use forecasts from the IMF's World Economic Outlook (WEO, October , updated in January ) through and then generally.

Economic sustainability- how far should the state involve itself in the world of business? Definitions and conceptual understanding. o It is the use of a bevy of strategies for in order to employ all of the existing resources optimally.

o A responsible and beneficial balance that can be achieved over the longer term would be the most ideal form of economic sustainability.

The Fed - Should We Be Concerned Again About U.S. Current Account Sustainability?