A proposal for the greening of textbook macro: 'IS-LM-EE'

The celebrated ecological economist Herman Daly asked: "Is there not a negl ected connection between the environment and the macroeonomics we teach? If there is no such thing as environmental macroeconomics in our textbooks, s hould there be? If so, what would it look like?" [Daly, H., 1991. Towards a n environmental macroeconomics. Land Econ. 67(2), 255-259]. Emphasising the need to breach widely-used undergraduate texts - such as Abel and Bernanke [Abel, A., Bernanke, B.S., 1998. Macroeconomics, 3rd edition. Addison-Wesl ey, New York], Begg et al. [Begg, D., Fischer, S., Dornbusch: R., 1998. Eco nomics 5th edition. McGraw-Hill, London] and Sloman [Sloman, J., 1997. Econ omics, 3rd edition, Prentice-Hall, London] - we show that an 'environmental equilibrium' (EE) line can be added to the standard IS-LM diagram which re mains the workhorse of undergraduate macro teaching and is widely used for applied policy analysis. The familiar comparative static analysis of fiscal and monetary policy are reworked. It is argued that chapter sections detai ling the environmental extension should be incorporated into all IS-LM-usin g texts. (C) 2000 Elsevier Science B.V. All rights reserved.