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A physical production function for the US economy

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  • Thompson, Henry

Abstract

This paper introduces and presents an estimate of a production function motivated by physics with labor and energy providing force to produce work. The separate interactions of capital with labor and energy lead to reliable estimates for US output from 1951 to 2008 with fixed capital assets, the labor force, and total Btu energy inputs. Underpaid energy has an output elasticity twice that of labor. Overpaid labor faces elastic own substitution while there is weak substitution for capital. The policy implications of these properties are discussed.

Suggested Citation

  • Thompson, Henry, 2016. "A physical production function for the US economy," Energy Economics, Elsevier, vol. 56(C), pages 185-189.
    • Handle: RePEc:eee:eneeco:v:56:y:2016:i:c:p:185-189
    DOI: 10.1016/j.eneco.2016.03.016
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    References listed on IDEAS

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    1. Barnett, A. H. & Reutter, Keith & Thompson, Henry, 1998. "Electricity substitution: some local industrial evidence," Energy Economics, Elsevier, vol. 20(4), pages 411-419, September.
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    3. Caloghirou, Yannis D. & Mourelatos, Alexi G. & Thompson, Henry, 1997. "Industrial energy substitution during the 1980s in the Greek economy," Energy Economics, Elsevier, vol. 19(4), pages 476-491, October.
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    7. Thompson, Henry, 2006. "The applied theory of energy substitution in production," Energy Economics, Elsevier, vol. 28(4), pages 410-425, July.
    8. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
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    Cited by:

    1. 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.
    2. Cheng Maolin & Shi Guojun & Han Yun, 2019. "A Modified CES Production Function Model and Its Application in Calculating the Contribution Rate of Energy and Other Influencing Factors to Economic Growth," Journal of Systems Science and Information, De Gruyter, vol. 7(2), pages 161-172, April.
    3. Sergey Baranov & Tatiana Skufina & Vera Samarina, 2023. "Influence of Underutilization of Production Capacities on the Dynamics of Russian GDP: An Assessment on the Basis of Production Functions," JRFM, MDPI, vol. 16(3), pages 1-10, March.

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    More about this item

    Keywords

    Macroeconomic production; Substitution; Energy;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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