The DEFINE (Dynamic Ecosystem-FINance-Economy) model is a stock-flow-fund ecological macroeconomic model that analyses the interactions between the ecosystem, the financial system and the macroeconomy. It aims at defining the boundaries of economic activity and analysing policies and strategies that can allow our societies to live within the biophysical limits of a finite planet.
DEFINE draws on the post-Keynesian and ecological economics tradition. It combines the stock-flow consistent approach developed by Godley and Lavoie with the flow-fund model of Georgescu-Roegen. By doing so it provides an integrated approach to the combined analysis of physical and monetary stocks and flows. The model incorporates explicitly the laws of thermodynamics, the carbon cycle, the climate change damages, the waste generation process, the endogeneity of money and the impact of finance on economic activity.
DEFINE produces various scenarios for the future of the ecosystem and the global economy. It is also used to evaluate the long-run effects of various types of environmental policies and strategies, paying particular attention to the role of finance.
The initial version of DEFINE was developed in a collaborative project of New Economics Foundation with the University of Greenwich and the University of the West of England. This project was funded by the Network for Social Change. A part of the project that focused on the links between monetary policy and ecological sustainability was also funded by the Vice Chancellor’s Early Career Research scheme of the University of the West of England.