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Costly Capital Reallocation and Energy Use

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  • Antonia Diaz

    (Universidad Carlos III)

  • Luis A. Puch

    (Universidad Complutense de Madrid)

  • Maria D. Guillo

    (Universidad de Alicante)

Abstract

In times series data, energy use does not change much with energy price changes. However, energy use is responsive to international differences in energy prices in cross-section data across countries. In this paper we consider a model of energy use in which production takes place at individual plants and capital can be used either to directly produce output or to reduce the energy required to run the plant. We assume that reallocating capital from one use to another is costly. This turns out to be crucial for the quantitative properties of the model to be is conformity with the low short-run and high long-run elasticities of energy use seen in data. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/j.red.2003.09.005
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 7 (2004)
Issue (Month): 2 (April)
Pages: 494-518

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Handle: RePEc:red:issued:v:7:y:2004:i:2:p:494-518

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Related research

Keywords: energy price; energy use; capital reallocation; number of plants.;

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References

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Citations

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Cited by:
  1. Francesco Ricci, 2007. "Environmental policy and growth when inputs are differentiated in pollution intensity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 38(3), pages 285-310, November.
  2. Luisa Fernanda Gutierrez & Gustavo A. Marrero & Luis A. Puch, 2010. "Los efectos medioambientales del boom y el parón inmobiliario," Economic Reports 01-2010, FEDEA.
  3. Luis A. Puch & Antonia Díaz, 2007. "Plants, Vintage Capital and Energy Use," 2007 Meeting Papers 411, Society for Economic Dynamics.
  4. Teresa Sousa, 2011. "International macroeconomic interdependence and imports of oil in a small open economy," Portuguese Economic Journal, Springer, vol. 10(1), pages 35-60, April.
  5. Claudia S. Gómez-López & Luis A. Puch, 2008. "Uso de Energía en Economías Exportadoras de Petróleo," Economic Reports 24-08, FEDEA.
  6. Revelli Federico, 2012. "Business taxation and economic performance in hierarchical government structures," Department of Economics Working Papers 201204, University of Turin.

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