4-D Modeling of a Sustainable Economy: Integrating Economic, Environmental, Population, and Monetary Models

Abstract

Leontief’s Input-Output Analysis equation has long been used around the world and especially in China to calculate production and consumption balances. This research shows how to connect environmental and financial balances to production balances in an economic region by generalizing the Leontief’s equations from vector form to tensor form. This is important for creating economic and environmental policies aimed at sustainable economies. It provides a general modeling approach which can quantitatively connect economic processes with biological and physical processes of the environment. If economic processes cannot be measured as to their real physical/biological impacts, one does not know whether or not such economic processes are sustainable in nature. The tensor generalization also enables the depiction of both economic processes as production and finance. The use of tensor mathematics for input-output models of both economy and its environment provides a data architecture to create simulation models of the environmental impact of an economy.