IDEAS home Printed from https://ideas.repec.org/a/spr/bioerq/v5y2020i1d10.1007_s41247-020-00068-1.html
   My bibliography  Save this article

Energy in Growth Accounting and the Aggregation of Capital and Output

Author

Listed:
  • Reiner Kümmel

    (University of Würzburg)

  • Dietmar Lindenberger

    (University of Cologne)

Abstract

We review the physical aggregation of value added and capital in terms of work performance and information processing and its relation to the deflated monetary time series of output and capital. In growth accounting it complements the time series of labor and energy, measured in hours worked per year and kilowatt-hours consumed per year, respectively. This aggregation is the conceptual basis on which those energy-dependent production functions have been constructed that reproduce economic growth of major industrial countries in the 20th century with small residuals and output elasticities that are for energy much larger and for labor much smaller than the cost shares of these factors. Accounting for growth in such a way, which deviates from that of mainstream economics, may serve as a first step towards integrating the First and the Second Law of Thermodynamics into economics.

Suggested Citation

  • Reiner Kümmel & Dietmar Lindenberger, 2020. "Energy in Growth Accounting and the Aggregation of Capital and Output," Biophysical Economics and Resource Quality, Springer, vol. 5(1), pages 1-10, March.
    • Handle: RePEc:spr:bioerq:v:5:y:2020:i:1:d:10.1007_s41247-020-00068-1
    DOI: 10.1007/s41247-020-00068-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41247-020-00068-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41247-020-00068-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dietmar Lindenberger & Florian Weiser & Tobias Winkler & Reiner Kümmel, 2017. "Economic Growth in the USA and Germany 1960–2013: The Underestimated Role of Energy," Biophysical Economics and Resource Quality, Springer, vol. 2(3), pages 1-23, September.
    2. Robert M. Solow, 1994. "Perspectives on Growth Theory," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 45-54, Winter.
    3. Joan Robinson, 1953. "The Production Function and the Theory of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 81-106.
    4. Aude Illig & Ian Schindler, 2017. "Oil Extraction, Economic Growth, and Oil Price Dynamics," Biophysical Economics and Resource Quality, Springer, vol. 2(1), pages 1-17, March.
    5. Fix, Blair, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," SocArXiv tfwju, Center for Open Science.
    6. Dietmar Lindenberger, 2003. "Service Production Functions," Journal of Economics, Springer, vol. 80(2), pages 127-142, October.
    7. Aude Illig & Ian Schindler, 2017. "Oil Extraction, Economic Growth, and Oil Price Dynamics," Post-Print hal-01977756, HAL.
    8. Fix, Blair, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 4(1), pages 1-15.
    9. Blair Fix, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," Biophysical Economics and Resource Quality, Springer, vol. 4(1), pages 1-15, March.
    10. Robert U. Ayres & Benjamin Warr, 2009. "The Economic Growth Engine," Books, Edward Elgar Publishing, number 13324.
    11. Robinson, Joan, 1971. "The Measure of Capital: The End of the Controversy," Economic Journal, Royal Economic Society, vol. 81(323), pages 597-602, September.
    12. Ayres, Robert U & Ayres, Leslie W & Warr, Benjamin, 2003. "Exergy, power and work in the US economy, 1900–1998," Energy, Elsevier, vol. 28(3), pages 219-273.
    13. Jesus Felipe & Franklin M. Fisher, 2003. "Aggregation in Production Functions: What Applied Economists should Know," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 208-262, May.
    14. Matthew K. Heun & João Santos & Paul E. Brockway & Randall Pruim & Tiago Domingos & Marco Sakai, 2017. "From Theory to Econometrics to Energy Policy: Cautionary Tales for Policymaking Using Aggregate Production Functions," Energies, MDPI, vol. 10(2), pages 1-44, February.
    15. R. Stresing & D. Lindenberger & R. Kümmel, 2008. "Cointegration of output, capital, labor, and energy," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 66(2), pages 279-287, November.
    16. Joseph R. Burger & James H. Brown & John W. Day & Tatiana P. Flanagan & Eric D. Roy, 2019. "The Central Role of Energy in the Urban Transition: Global Challenges for Sustainability," Biophysical Economics and Resource Quality, Springer, vol. 4(1), pages 1-13, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dietmar Lindenberger & Florian Weiser & Tobias Winkler & Reiner Kümmel, 2017. "Economic Growth in the USA and Germany 1960–2013: The Underestimated Role of Energy," Biophysical Economics and Resource Quality, Springer, vol. 2(3), pages 1-23, September.
    2. Lindenberger, Dietmar & Kümmel, Reiner, 2011. "Energy and the state of nations," Energy, Elsevier, vol. 36(10), pages 6010-6018.
    3. Lindenberger, Dietmar & Kuemmel, Rainer, 2011. "Energy and the State of Nations," EWI Working Papers 2011-11, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    4. Ayres, Robert U. & van den Bergh, Jeroen C.J.M. & Lindenberger, Dietmar & Warr, Benjamin, 2013. "The underestimated contribution of energy to economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 79-88.
    5. Paul E. Brockway & Matthew K. Heun & João Santos & John R. Barrett, 2017. "Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation," Energies, MDPI, vol. 10(2), pages 1-23, February.
    6. Blair Fix, 2019. "Dematerialization Through Services: Evaluating the Evidence," Biophysical Economics and Resource Quality, Springer, vol. 4(2), pages 1-17, June.
    7. Garcia, Luis Enrique & Illig, Aude & Schindler, Ian, 2018. "Oil Cycle Dynamics and Future Oil Price Scenarios," TSE Working Papers 18-969, Toulouse School of Economics (TSE).
    8. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," SocArXiv g86am, Center for Open Science.
    9. Elen Presotto & Gabrielli Martinelli & Gabriela Allegretti & Edson Talamini, 2021. "Energy Efficiency, Monetary Costs, and Sustainability of Brazilian Rainfed and Irrigated Rice Cropping Systems," Biophysical Economics and Resource Quality, Springer, vol. 6(3), pages 1-14, September.
    10. Bichler, Shimshon & Nitzan, Jonathan, 2023. "Inflation as Redistribution. Creditors, Workers, Policymakers," Working Papers on Capital as Power 2023/01, Capital As Power - Toward a New Cosmology of Capitalism.
    11. Kümmel, Reiner & Lindenberger, Dietmar & Weiser, Florian, 2015. "The economic power of energy and the need to integrate it with energy policy," Energy Policy, Elsevier, vol. 86(C), pages 833-843.
    12. Fix, Blair & Nitzan, Jonathan & Bichler, Shimshon, 2019. "Real GDP: The Flawed Metric at the Heart of Macroeconomics," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 88, pages 51-59.
    13. Aramendia, Emmanuel & Brockway, Paul E. & Pizzol, Massimo & Heun, Matthew K., 2021. "Moving from final to useful stage in energy-economy analysis: A critical assessment," Applied Energy, Elsevier, vol. 283(C).
    14. Luis Enrique Garcia & Aude Illig & Ian Schindler, 2020. "Understanding Oil Cycle Dynamics to Design the Future Economy," Biophysical Economics and Resource Quality, Springer, vol. 5(4), pages 1-17, December.
    15. Dirk Schoenmaker & Hans Stegeman, 2023. "Can the Market Economy Deal with Sustainability?," De Economist, Springer, vol. 171(1), pages 25-49, March.
    16. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," Working Papers on Capital as Power 2020/01, Capital As Power - Toward a New Cosmology of Capitalism.
    17. Santos, João & Domingos, Tiago & Sousa, Tânia & St. Aubyn, Miguel, 2018. "Useful Exergy Is Key in Obtaining Plausible Aggregate Production Functions and Recognizing the Role of Energy in Economic Growth: Portugal 1960–2009," Ecological Economics, Elsevier, vol. 148(C), pages 103-120.
    18. Santos, João & Domingos, Tiago & Sousa, Tânia & St. Aubyn, Miguel, 2016. "Does a small cost share reflect a negligible role for energy in economic production? Testing for aggregate production functions including capital, labor, and useful exergy through a cointegration-base," MPRA Paper 70850, University Library of Munich, Germany.
    19. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    20. Blair Fix, 2019. "The Aggregation Problem: Implications for Ecological and Biophysical Economics," Biophysical Economics and Resource Quality, Springer, vol. 4(1), pages 1-15, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:bioerq:v:5:y:2020:i:1:d:10.1007_s41247-020-00068-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.