Useful work and information as drivers of economic growth
AbstractA semi-empirical endogenous growth theory was proposed by the authors in 2005. It is based on a model of the economy as a two-stage materials/energy processing system. Growth is simulated by a two-parameter production function with two traditional factors, labor and capital, and a non-traditional factor, namely ‘useful work’. The non-traditional factor is calculated from primary energy inputs multiplied by an empirically estimated average energy conversion efficiency, which is a function of changing technology over time. This model ‘explains’ past US growth from 1900 through 1973–74 with satisfactory accuracy but it slightly underestimates subsequent growth (i.e. it leaves a small unexplained but increasing residual) for the period after 1975. However, by subdividing capital stock into traditional and ICT components, we are able to extend the theory to explain US economic growth accurately. In this paper we also extend the results to Japan. The revised production function has only three independent parameters. The new model also has implications for future economic growth, energy and environmental policy that differ significantly from the traditional growth theory. These implications are discussed briefly.
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Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 73 (2012)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/ecolecon
Economic growth; Production function; Energy; LINEX;
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- Jie Li & Robert Ayres, 2008. "Economic Growth and Development: Towards a Catchup Model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(1), pages 1-36, May.
- Martin de Wit & Matthew Kuperus Heun & Douglas J Crookes, 2013. "An overview of salient factors, relationships and values to support integrated energy-economic systems dynamic modelling," Working Papers 02/2013, Stellenbosch University, Department of Economics.
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