A Proposal for the Greening of Textbook Macro: 'IS-LM-EE'

The celebrated ecological economist Herman Daly asked "Is there no a neglected connection between the environment and the macroeconomics we teach? If there is no such thing as environmental macro in our textbooks, should there be? If so what should it look like?". Emphasising the need to breach widely-used undergraduate texts we show that an 'environmental equilibrium' (EE) line can be added to the standard IS-LM diagram that remains the work horse of undergraduate macro-teaching and is widely used for applied policy analysis. The familiar comparative static analyses of fiscal and monetary policy are reworked. It is argued that chapter sections detailing the environmental extension should be incorporated into all IS-LM-using texts.