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Threshold effects of energy price changes

Author

Listed:
  • Soest, D.P. van
  • Kuper, G.H.
  • Jacobs, J.

    (Groningen University)

Abstract

This paper presents a theoretical model emphasising energy investments’characteristics of uncertainty and irreversibility. The theoretical modelsuggests threshold effects. Firms are induced to substitute away from energyonly if prices of energy exceed a certain threshold level and they reverse thetechnology only if energy prices are low enough. Estimating a simpleinvestment relation using panel data for the Dutch economy, we findevidence for threshold effects.

Suggested Citation

  • Soest, D.P. van & Kuper, G.H. & Jacobs, J., 2000. "Threshold effects of energy price changes," Research Report 00C31, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  • Handle: RePEc:gro:rugsom:00c31
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    File URL: http://irs.ub.rug.nl/ppn/240565746
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    References listed on IDEAS

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    20. repec:dgr:rugsom:99c21 is not listed on IDEAS
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    Cited by:

    1. Cologni, Alessandro & Manera, Matteo, 2008. "Oil prices, inflation and interest rates in a structural cointegrated VAR model for the G-7 countries," Energy Economics, Elsevier, vol. 30(3), pages 856-888, May.

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