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The Capital-Energy Complementarity Debate Revisited

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  • Solow, John L
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    Abstract

    This paper argues that the empirical disagreement as to whether capital and energy are complements or substitutes is not likely to be reconciled with aggregate data. It demonstrates that price-induced changes in the composition of output can cause either outcome in the aggregate, even if no technical substitution is possible. Substitution by consumers and changes in the relative incomes of consumers and foreigners are identified as key factors in determining which outcome arises. Copyright 1987 by American Economic Association.

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 77 (1987)
    Issue (Month): 4 (September)
    Pages: 605-14

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    Handle: RePEc:aea:aecrev:v:77:y:1987:i:4:p:605-14

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    Cited by:
    1. Zhang, Fan, 2013. "The energy transition of the transition economies: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 679-686.
    2. van Zon, Adriaan & Yetkiner, I. Hakan, 2003. "An endogenous growth model with embodied energy-saving technical change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 81-103, February.
    3. Edward Kokkelenberg & Sang Nguyen, 1989. "Modeling technical progress and total factor productivity: A plant level example," Journal of Productivity Analysis, Springer, vol. 1(1), pages 21-42, March.
    4. Ziesemer ,Thomas, 1995. "Reconciling environmental policy with employment, international competitiveness and participation requirements," Research Memorandum 016, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    5. Mark E Doms, 1993. "Energy Intensity, Electricity Consumption, and Advanced Manufacturing Technology Usage," Working Papers 93-9, Center for Economic Studies, U.S. Census Bureau.
    6. Halkos, George & Tzeremes, Nickolaos, 2011. "The effect of energy consumption on countries’ economic efficiency: a conditional robust non parametric approach," MPRA Paper 28692, University Library of Munich, Germany.
    7. Sang V Nguyen & Mary L Streitwieser, 1998. "Factor Substitution In U.S. Manufacturing: Does Plant Size Matter," Working Papers 98-6, Center for Economic Studies, U.S. Census Bureau.
    8. Lecca, Patrizio & Swales, Kim & Turner, Karen, 2011. "An investigation of issues relating to where energy should enter the production function," Economic Modelling, Elsevier, vol. 28(6), pages 2832-2841.
    9. Sang V Nguyen & Mary L Streitwieser, 1997. "Capital-Energy Substitution Revisted: New Evidence From Micro Data," Working Papers 97-4, Center for Economic Studies, U.S. Census Bureau.
    10. Okushima, Shinichiro & Tamura, Makoto, 2007. "Multiple calibration decomposition analysis: Energy use and carbon dioxide emissions in the Japanese economy, 1970-1995," Energy Policy, Elsevier, vol. 35(10), pages 5156-5170, October.
    11. Keting Shen & John Whalley, 2013. "Capital-Labor-Energy Substitution in Nested CES Production Functions for China," NBER Working Papers 19104, National Bureau of Economic Research, Inc.
    12. Zha, Donglan & Ding, Ning, 2014. "Elasticities of substitution between energy and non-energy inputs in China power sector," Economic Modelling, Elsevier, vol. 38(C), pages 564-571.
    13. Arnberg, Soren & Bjorner, Thomas Bue, 2007. "Substitution between energy, capital and labour within industrial companies: A micro panel data analysis," Resource and Energy Economics, Elsevier, vol. 29(2), pages 122-136, May.
    14. Shigehara, Kumiharu, 1992. "Causes of declining growth in industrialized countries," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 15-39.
    15. Sang V Nguyen & Robert H Mcguckin, 1988. "Public Use Microdata: Disclosure And Usefulness," Working Papers 88-3, Center for Economic Studies, U.S. Census Bureau.

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