The primary target variables in LowGrow are GDP, fiscal debt, unemployment, poverty (in terms of individual income) and CO2 emissions. They are connected through a production function using labor and capital. These are all relevant parameters that can help to define the position of society in relation to sustainability targets. The model needed to be expanded to better represent resource flows and distribution between different sectors in the economy.
In the programme economic growth was defined in terms of GDP. Classical value theories were explored in order to investigate how the value added in the production process is affected by the usage of production factors (including physical resources) and productivity. Financial systems and their dependence on economic growth were addressed, as well as models for monetary and credit functions in the banking system more compatible with a steady-state or degrowing economy, such as the Chicago Plan.
The work package on economic modeling was led by Mikael Malmaeus, IVL Environmental Research Institute, in close collaboration with Eva Alfredsson, Tillväxtanalys.