Macroeconomic models for assessing the transition towards a circular economy: a systematic review

The Circular Economy (CE) paradigm has gained traction in both academic discourse and industrial practice. While a transition towards a CE is generally associated with more sustainable futures, less is known about its socio-economic feasibility. This article provides a systematic literature review of contributions to macroeconomic modelling which evaluate environmental and socio-economic impacts of CE interventions (classified in terms of closing supply chains, resource efficiency, residual waste management, and product lifetime extension). Differences in modelling approaches (Leontief input-output, macroeconometric input-output, and computable general equilibrium), and underlying assumptions relating to changes in final demand and technology, are found to be significant drivers of differences in the modelled outcomes of CE interventions. Through this review, various research gaps are identified, including addressing the challenges to sectoral and regional disaggregation (allowing for the modelling of international trade-offs), broader consideration of societal issues beyond GDP and employment (such as environmental, gender or transnational justice), and consideration of broader modelling dynamics (such as rebound effects, the interplay between demand and distribution, and real-financial interactions).