General Purpose Technologies and Energy Policy
AbstractWe employ a general purpose technology model with endogenous stochastic growth to simulate the effects of different energy policy schemes. An R&D sector produces endogenous growth by developing radical and incremental technologies. These innovations result in blueprints for capital intermediates, which require raw capital and either carbon or non-carbon-based fuels. A carbon tax therefore affects not only the final production sector but also the R&D sector by making the development of non-carbon-based technologies more attractive. Due to path dependencies and possible lock-in situations, policy can have a significant long-term impact on the energy structure of the economy. Allowing for different elasticities of substitution between consumption and environmental quality, we examine the effects of different carbon policies on growth, environmental quality, and welfare. We find that an anti-carbon policy may reduce welfare initially, but in the long run there is a strong potential for a ‘double dividend’ due to faster growth and reduced pollution.
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Bibliographic InfoPaper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number 011.
Date of creation: 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-03 (All new papers)
- NEP-CMP-2005-04-03 (Computational Economics)
- NEP-ENE-2005-04-03 (Energy Economics)
- NEP-INO-2005-04-03 (Innovation)
- NEP-TID-2005-04-03 (Technology & Industrial Dynamics)
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- Kenneth Carlaw & Richard Lipsey, 2011. "Sustained endogenous growth driven by structured and evolving general purpose technologies," Journal of Evolutionary Economics, Springer, vol. 21(4), pages 563-593, October.
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