Six economic frameworks, one fiscal blueprint: new study maps the road to a just, green economy

A bold new synthesis published in the International Review of Economics argues that the world’s leading sustainability frameworks, often treated as rival schools of thought, can in fact be woven together into a single coherent strategy for fiscal policy. The study, authored by Ina Dimitrieva of the Discipline of Political Economy at the University of Sydney, examines six major paradigms: Green Growth, Degrowth, Post-Growth, Doughnut Economics, Modern Monetary Theory, and the United Nations Sustainable Development Goals. Rather than asking which framework is correct, the paper asks a more practical question: can their insights be combined to finance a transition that is simultaneously ecologically safe and socially just? The answer, according to the analysis, is a carefully sequenced yes, provided policymakers abandon the assumption that one universal model fits every country and sector.

The intellectual stakes are considerable. Current fiscal practice across most advanced economies remains anchored in the New Economic Consensus, an offshoot of neoclassical economics that treats budget deficits as inherently inflationary, subordinates fiscal policy to central bank interest rates, and largely ignores the environmental damage generated by economic activity. Sustainability researchers have sharpened their critique of this orthodoxy, arguing that its core assumptions fail to capture ecological limits, nonlinear dynamics, and distributional realities. Dimitrieva’s analysis instead draws on post-Keynesian traditions and Modern Monetary Theory, which hold that currency-issuing governments are not financially constrained in the way households are, and that the true limits on public spending are real resources, productive capacity, and inflation risk.

The six frameworks differ profoundly on the desirability of growth itself. Green Growth, championed by the OECD, the UN Environment Programme and the World Bank, rests on the hope of decoupling GDP expansion from environmental harm through technological innovation, carbon pricing and circular economy practices. Yet critics, most prominently in work questioning whether green growth is possible at all, point to the speculative nature of absolute decoupling and the stubborn problem of rebound effects, where efficiency gains simply fuel more consumption. Degrowth takes the opposite stance, insisting that wealthy nations must democratically and deliberately scale down energy and material throughput without compromising wellbeing. Post-Growth, grounded in Herman Daly’s steady-state economics, envisions the destination: an economy of constant stocks and flows operating within the planet’s regenerative and absorptive capacities, where knowledge and culture may flourish even as material extraction stabilises.

Doughnut Economics, developed by Kate Raworth, supplies the study’s normative compass. Its visual logic is elegant: an inner ring of social foundations, from water and housing to gender equality and political voice, derived from the Sustainable Development Goals, and an outer ring of planetary boundaries drawn from the Earth-system science of Johan Rockström and colleagues, whose recent work shows humanity has already breached six of nine boundaries. The band between the rings is the safe and just space where humanity can thrive. Notably, the analysis highlights a structural weakness of the SDGs themselves: their economic assumptions remain largely neoclassical, and Goal 8’s pursuit of GDP growth can directly conflict with the climate and biodiversity goals, a tension researchers have quantified as a sustainable development oxymoron. The paper argues the Goals need recalibration to incorporate distributive and biophysical insights from the more transformative paradigms.

Modern Monetary Theory plays the operational role in the proposed synthesis. Because monetarily sovereign governments, such as those of the United States, the United Kingdom, Australia and Japan, spend in currencies they issue, they need not wait for tax revenue or bond markets to fund transformative investment. Taxes, in this framing, create demand for the currency, manage inflation, and redistribute income; they are not the financing precondition for spending. This insight, the paper notes, became impossible to ignore after the 2008 financial crisis and the pandemic, when governments ran large deficits without fiscal collapse. MMT therefore unlocks what the author calls fiscal space: the capacity to finance universal public services, renewable infrastructure and a Job Guarantee, an employment buffer stock first proposed by Hyman Minsky that stabilises both prices and livelihoods.

The crucial move is differentiation. The study argues that Green Growth strategies are best suited to low-income countries and sectors naturally amenable to greening, such as renewable energy, transport and tourism, where expanding access to public goods remains essential and clean-technology leapfrogging offers genuine development gains. Degrowth-oriented policies, by contrast, fit high-income, high-consumption economies, where deliberately downscaling throughput is vital for staying within planetary boundaries. These differentiated pathways then converge on a Post-Growth steady-state economy, anchored in the Doughnut’s vision of a safe and just space. The paper’s conceptual pathway diagram traces this progression: MMT-enabled fiscal space at the start, context-specific Green Growth or Degrowth transitions in the middle, and Doughnut-guided steady-state convergence at the end.

The comparative analysis is conducted across five dimensions: vision of the economy, relation to growth, role of the state, role of money, and concrete use of fiscal tools. On money, the frameworks split revealingly. Green Growth treats green finance, green bonds and climate-adjusted central bank operations as instruments within capitalist structures, a critique voiced by degrowth scholars who see financialisation commodifying nature. Degrowth and Doughnut Economics propose more radical redesigns, including full-reserve banking, complementary currencies, and the democratisation of money creation, treating money as a social relationship rather than a neutral medium. MMT reframes money as a sovereign public utility limited only by inflation and real resources. The Sustainable Development Goals camp promotes sovereign green bonds and retooled central bank mandates to close the vast financing gap, particularly the pandemic recovery gap widening between rich and poor nations.

On fiscal instruments themselves, the convergences are striking. Nearly every framework endorses progressive, equity-oriented taxation: shifting the tax base away from labour and toward wealth, resource extraction, rent, inheritance and ecologically harmful consumption. Degrowth scholarship adds minimum and maximum income thresholds, universal basic income, and shorter working weeks, though a systematic review of fifteen years of degrowth research found concrete, empirically grounded proposals remain scarce. Here the author identifies a critical blind spot: mainstream degrowth and post-growth literature often defaults to orthodox fiscal framing, assuming wealth taxes must precede public spending. MMT dissolves that sequencing problem. Eco-social policies can be funded directly through sovereign monetary capacity, with taxation serving afterwards as the instrument for demand management, inflation control and redistribution, tools of governance rather than prerequisites for action.

The paper is candid about limits. Monetary sovereignty is not universal: Eurozone members, low-income countries and states burdened by foreign-currency debt cannot simply spend their way to sustainability, raising urgent questions about how non-sovereign nations can expand fiscal space without deepening vulnerability. The author also acknowledges omitting important perspectives, including the Wellbeing Economy, commons-based approaches, the care economy, and Latin American Indigenous frameworks such as Buen Vivir, and points to the Porter Hypothesis tradition in arguing that well-designed environmental regulation can enhance, rather than erode, competitiveness and innovation.

The implications, if the synthesis gains traction, are significant. Fiscal policy would be repositioned as the central engine of socio-ecological transformation: public investment steered toward renewables, low-carbon infrastructure and social services; subsidies and taxes aligned with throughput limits rather than GDP targets; democratic oversight and international cooperation securing coherence between national development needs and planetary ceilings. The Sustainable Development Goals, recalibrated to shed their internal contradictions, could serve as the institutional scaffold for a global consensus. What emerges is not a single doctrine but a pluralist meta-framework, one that treats Green Growth, Degrowth, Post-Growth, Doughnut Economics, MMT and the SDGs as complementary lenses on a shared problem: how to raise and allocate public resources so that economies serve people and planet alike, within the biophysical limits of a finite Earth.

Subject of Research: A comparative analysis of six sustainability-oriented economic frameworks and their integration into a meta-framework for sustainable fiscal policy

Article Title: Sustainability and fiscal policy: bridging economic frameworks for global equity and ecological balance

Article References: Sustainability and fiscal policy: bridging economic frameworks for global equity and ecological balance. (n.d.). https://doi.org/10.1007/s12232-026-00549-7

Image Credits: AI Generated

DOI: 10.1007/s12232-026-00549-7

Keywords: fiscal policy, green growth, degrowth, post-growth, doughnut economics, modern monetary theory, sustainable development goals, planetary boundaries, steady-state economy, just transition, ecological macroeconomics, monetary sovereignty