Advanced Search
MyIDEAS: Login to save this paper or follow this series

Capital-Energy Substitution Revisted: New Evidence From Micro Data

Contents:

Author Info

  • Sang V Nguyen
  • Mary L Streitwieser

Abstract

We use new micro data for 11,520 plants taken from the Census Bureau=s 1991 Manufacturing Energy Consumption Survey (MECS) and 1991 Annual Survey of Manufactures (ASM) to estimate elasticities of substitution between energy and capital. We found that energy and capital are substitutes. We also found that estimates of Allen elasticities of substitution -- which have been used as a standard measure of substitution -- are sensitive to varying data sets and levels of aggregation. In contrast, estimates of Morishima elasticities of substitution -- which are theoretically superior to the Allen elasticities -- are more robust (except when two-digit level data are used). The results support the views that (i) the Morishima elasticity is a better measure of factor substitution and (ii) micro data provide more accurate elasticity estimates than those obtained from aggregate data. Our findings appear to resolve the long-standing conflict among the estimates reported in the many previous studies regarding energy-capital substitution/complementarity.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://ftp2.census.gov/ces/wp/1997/CES-WP-97-04.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 97-4.

as in new window
Length:
Date of creation: Apr 1997
Date of revision:
Handle: RePEc:cen:wpaper:97-4

Contact details of provider:
Postal: 4600 Silver Hill Road, Washington, DC 20233
Phone: (301) 763-6460
Fax: (301) 763-5935
Email:
Web page: http://www.census.gov/ces
More information through EDIRC

Related research

Keywords: CES; economic; research; micro; data; microdata; chief; economist;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Catherine Morrison, 1993. "Energy and Capital: Further Exploration of E-K Interactions and Economic Performance," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 217-244.
  2. Anderson, Richard G & Thursby, Jerry G, 1986. "Confidence Intervals for Elasticity Estimators in Translog Models," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 647-56, November.
  3. Mark E Doms, 1992. "Estimating Capital Efficiency Schedules Within Production Functions," Working Papers 92-4, Center for Economic Studies, U.S. Census Bureau.
  4. Solow, John L, 1987. "The Capital-Energy Complementarity Debate Revisited," American Economic Review, American Economic Association, American Economic Association, vol. 77(4), pages 605-14, September.
  5. Douglas W Dwyer, 1997. "Productivity Races II: The Issue of Capital Measurement," Working Papers 97-3, Center for Economic Studies, U.S. Census Bureau.
  6. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, American Economic Association, vol. 66(5), pages 845-57, December.
  7. Kulatilaka, Nalin, 1985. "Tests on the validity of static equilibrium models," Journal of Econometrics, Elsevier, Elsevier, vol. 28(2), pages 253-268, May.
  8. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, Elsevier, vol. 16(3), pages 339-365, August.
  9. Apostolakis, Bobby E., 1990. "Energy--capital substitutability/ complementarity : The dichotomy," Energy Economics, Elsevier, Elsevier, vol. 12(1), pages 48-58, January.
  10. Chung, Jae Wan, 1987. "On the Estimation of Factor Substitution in the Translog Model," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 409-17, August.
  11. Griffin, James M, 1981. "Engineering and Econometric Interpretations of Energy-Capital Complementarity: Comment," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 1100-1104, December.
  12. Pindyck, Robert S & Rotemberg, Julio J, 1983. "Dynamic Factor Demands and the Effects of Energy Price Shocks," American Economic Review, American Economic Association, American Economic Association, vol. 73(5), pages 1066-79, December.
  13. Norsworthy, J R & Malmquist, David H, 1983. "Input Measurement and Productivity Growth in Japanese and U.S. Manufacturing," American Economic Review, American Economic Association, American Economic Association, vol. 73(5), pages 947-67, December.
  14. Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, American Economic Association, vol. 79(4), pages 882-88, September.
  15. Nguyen, Sang V & Reznek, Arnold P, 1993. " Factor Substitution in Small and Large U.S. Manufacturing Establishments: 1977-82," Small Business Economics, Springer, Springer, vol. 5(1), pages 37-54, March.
  16. Turnovsky, Michelle H L & Donnelly, William A, 1984. "Energy Substitution, Separability, and Technical Progress in the Australian Iron and Steel Industry," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 2(1), pages 54-63, January.
  17. Turnovsky, Michelle & Folie, Michael & Ulph, Alistair, 1982. "Factor Substitutability in Australian Manufacturing with Emphasis on Energy Inputs," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 58(160), pages 61-72, March.
  18. Humphrey, David Burras & Moroney, John R, 1975. "Substitution among Capital, Labor, and Natural Resource Products in American Manufacturing," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 83(1), pages 57-82, February.
  19. Wales, Terence J., 1977. "On the flexibility of flexible functional forms : An empirical approach," Journal of Econometrics, Elsevier, Elsevier, vol. 5(2), pages 183-193, March.
  20. Burgess, David F., 1975. "Duality theory and pitfalls in the specification of technologies," Journal of Econometrics, Elsevier, Elsevier, vol. 3(2), pages 105-121, May.
  21. Sang V. Nguyen & Stephen H. Andrews, 1989. "The Effect of Energy Aggregation on Energy Elasticities: Some Evidence from U.S. Manufacturing Data," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 1), pages 149-156.
  22. W. Erwin Diewert, 2003. "Measuring Capital," NBER Working Papers 9526, National Bureau of Economic Research, Inc.
  23. Zvi Griliches, 1967. "Production Functions in Manufacturing: Some Preliminary Results," NBER Chapters, in: The Theory and Empirical Analysis of Production, pages 275-340 National Bureau of Economic Research, Inc.
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 in new window

Cited by:
  1. Shankar, Bhavani & Piesse, Jenifer & Thirtle, Colin, 2003. "Energy substitutability in transition agriculture: estimates and implications for Hungary," Agricultural Economics, Blackwell, Blackwell, vol. 29(2), pages 181-193, October.
  2. Giulia BETTIN & Alessia LO TURCO & Daniela MAGGIONI, 2011. "A firm level perspective on migration," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 360, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:97-4. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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