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Testing transitions: A new model to explore how producer- and consumer-led sustainability strategies could affect macroeconomic stability
The Stockholm Environment Institute has developed a new macroeconomic model to test how different sustainability strategies affect economic stability. Unlike traditional models, this version assumes people act based on past experience rather than optimal future knowledge. Initial experiments show that 'downshifting' (reducing working hours/workforce participation) can slow GDP growth and consumption without causing instability, whereas simply reducing consumption levels while maintaining the workforce can lead to recession and economic instability.
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Document type: Executive summary
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