Sustainable income: extending some Tisdell considerations to macroeconomic analyses

The depreciation of environmental capital is internalized within a simple Keynesian framework to permit the determination of sustainable income. The framework is empirically applied to the US economy by integrating standard macroeconomic data with macro‐environmental data which were derived by the adoption of a proxy method of valuation. The analysis includes the simulation of sustainable income paths and the evaluation of wages and technology/ management policies for achieving convergence between full employment and sustainable income. The scope for further conceptual development is demonstrated by the illustration of aggregate supply in the context of environmental depreciation.