Effective policy design for a sustainable economy

Lucas Bretschger, Simone Valente

Research output: Contribution to journalEditorial

1 Citation (Scopus)


Reorienting the global economy towards a sustainable path requires a thorough analysis of environmental pollution and natural resource depletion through the lens of sustainability economics – a field that is now mature and increasingly tackling problems that are relevant to policymaking at the microeconomic, macroeconomic, and global levels. The economic profession has moved from the core results established by the early literature to the most pressing issues of our time – in particular, the fact that both market and policy-coordination failures may cause unsustainable development. This paper presents the central issues in a formal integrated approach to economic sustainability analysis. We extend the traditional framework by summarizing novel contributions on fair and efficient burden sharing, the long-run internalisation of external effects, optimal environmental policy mix, and international environmental agreements. Specific topics include global climate policy, population growth, incomplete markets, the circular economy, and macroeconomic shocks. These elements form the foundation of an effective policy design for a an economy that is intrinsically compatible with the natural environment.
Original languageEnglish
Article number104462
JournalEuropean Economic Review
Publication statusPublished - Jun 2023

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