Question:

What is the effect of a socially and environmentally adjusted GDP on prices?

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Suppose you would adjust cenventional GDP for socail and environmental costs. Suppose it would then decrease. I am wondering whether the increase in costs on an aggregate measure like the GDP, would also have an inflationary effect on consumer prices?

If you take into account more costs on a macroeconomic level, these must be covered by someone on a microeconomic level as well.

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  1. Yes, in general it means that supply will gall a bit (meaning that people will consume less) which will lead to increase in prices. Of course part of income (through some transfer tools as taxes or directly) will be spend for environment protection/recreation.

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