Macroeconomic models fail to view the economy as a subsystem of the global ecosystem, and therefore fail to reckon with natural constraints. This text presents a two-country model of the world economy, and explores the interaction between the natural resource, labour, product and financial markets.

The purpose of this study is to better understand the essential interdependencies between the world economy and the global ecosystem, including human populations. World production, product prices, wages, interest rates, exchange rates, employment, and spending are shown to be mutually determined over time with the growth rates of country-specific renewable resources, the generation of waste, human population growth, waste assimilation by the basic fungible resource, and the sanitation and other health and human services provided by the government sectors. Particular attention is paid to...