"The Institute & Faculty of Actuaries have issued a call for research on possible limits to economic growth. Full details can be viewed here. The closing date for proposals is 12th August.
The investigation is in two parts. Part 1 investigates probability of limits to growth operating on a timescale of interest to actuarial work. Part 2 looks at the potential effects on financial markets in the event that economic growth is limited, either on a regional or global level.
Part 1 – Investigation of limits to growth
Examples of potential limits to economic growth arise from the following areas: energy availability (e.g. peak oil), resource depletion, food prices, climate change and environmental degradation. A number of separate questions arise:
a. Is further economic growth desirable for rich nations, or does the risk of growth outweigh the benefits; has growth become uneconomic?
b. Is further economic growth through the 21st century possible?
Is it possible over the long term to have rich nations experiencing economic stagnant growth (perhaps flipping between low growth and recession) while ‘developing nations’ grow more rapidly?
Part 2 – What would happen to financial markets if economics was a “zero-sum game”
The second section of the research is to focus on the actuarial implications of the slow-down or cessation of, and regional variations in, global economic growth. It will be necessary to have some actuarial input for this section. This part would focus on the practical impact of zero-growth on financial markets, including but not limited to, discount rates, credit spreads, equities, and inflation expectations.