The environment in macroeconomic analyses - comparisons between the United States and Sweden

Following the tradition of defining sustainable income as the difference between net national product and the allowance for the depreciation of environmental capital, a proxy is sought for the latter. By recourse to a Cobb-Douglas production function and some simplifying assumptions, the proxy is equated to energy consumption expenditure. The resulting income measure is tested for Sweden and the United States. The comparative analysis illustrates the scope for formulating policies that reconcile objectives that pertain to environmental sustainability income and employment. The policies considered are:
improvements in environmental capital efficiency, real wages, and environmental capital investments.