Criteria for Assessing Sustainable Development: Theoretical Issues and Empirical Evidence for the Case of Greece

We formulate two kinds of sustainability criteria by using feedback and arbi-trary rules for selecting policy variables in non optimizing economies. We show that when policy variables are selected arbitrarily their accounting prices could determine sustainability in addition to the accounting prices of the economys assets. We use our theoretical framework to obtain estimates of sustainability conditions in real economies. Thus, the papers contribu-tion consists in developing a systematic theoretical framework for determin-ing value functions, accounting prices, sustainability criteria, and genuine investment under fairly general non-optimizing behavioral rules, and then showing that this framework can be used in applied work to estimate sus-tainability conditions. Based on our theoretical model, we examined the case of the Greek economy. When there is no binding environmental policy then migration rate, growth of capital per worker and exogenous technical change are strong positive factors for sustainability. When we introduce potential environmental damages due to sulphur dioxide (SO2) emissions, our \u85ndings indicate that these damages a¤ect negatively the sustainability criterion