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Econometric estimation of nested production functions and testing in a computable general equilibrium analysis of economy-wide rebound effec ts

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  • Ha, Soo Jung
  • Lange, Ian
  • Lecca, Patrizio
  • Turner, Karen

Abstract

Quantitative models, such as computable general equilibrium (CGE), that are increasingly used to inform policy processes rely on a number of assumptions concerning how good and services are produced. Previous research has shown that the elasticity of substitution between inputs and the structure in which these inputs interact can have large impacts on model output. However, the choice of elasticities and production structure is often made without the support of statistical evidence. This research aims to address these points by estimating nesting structure and the elasticities of substitution therein across a number of sectors in the UK then testing the implications of introducing these estimates to parameterise a CGE model that is then used to simulation the economy-wide impacts of increased efficiency in the productive use of energy.

Suggested Citation

  • Ha, Soo Jung & Lange, Ian & Lecca, Patrizio & Turner, Karen, 2012. "Econometric estimation of nested production functions and testing in a computable general equilibrium analysis of economy-wide rebound effec ts," Stirling Economics Discussion Papers 2012-08, University of Stirling, Division of Economics.
    • Handle: RePEc:stl:stledp:2012-08
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    File URL: http://hdl.handle.net/1893/6422
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    References listed on IDEAS

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    Cited by:

    1. Viktor Koval & Olha Slobodianiuk & Volodymyr Yankovyi, 2018. "Production Forecasting And Evaluation Of Investments Using Allen Two-Factor Production Function," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    2. Pashkus, Natalia A., 2014. "Competitiveness of innovative companies in the new economy: the russian in the postcrisis period," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, August.
    3. Antoszewski, Michal, 2017. "Panel estimation of sectoral substitution elasticities for CES production functions," MF Working Papers 28, Ministry of Finance in Poland.
    4. Zachlod-Jelec, Magdalena & Boratynski, Jakub, 2016. "How large and uncertain are costs of 2030 GHG emissions reduction target for the European countries? Sensitivity analysis in a global CGE model," MF Working Papers 26, Ministry of Finance in Poland.
    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. Pashkus, V., 2013. "Public sector in the new economy," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, 07 Public.
    7. Lagomarsino, Elena, 2020. "Estimating elasticities of substitution with nested CES production functions: Where do we stand?," Energy Economics, Elsevier, vol. 88(C).
    8. 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.
    9. Brockway, Paul E. & Sorrell, Steve & Semieniuk, Gregor & Heun, Matthew Kuperus & Court, Victor, 2021. "Energy efficiency and economy-wide rebound effects: A review of the evidence and its implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    10. Rosa Duarte & Sofiane Rebahi & Julio S�nchez-Ch�liz & Cristina Sarasa, 2014. "Households' Behaviour And Environmental Emissions In A Regional Economy," Economic Systems Research, Taylor & Francis Journals, vol. 26(4), pages 410-430, December.
    11. Meng, Sam & Siriwardana, Mahinda & McNeill, Judith & Nelson, Tim, 2018. "The impact of an ETS on the Australian energy sector: An integrated CGE and electricity modelling approach," Energy Economics, Elsevier, vol. 69(C), pages 213-224.
    12. Magdalena Zachlod-Jelec & Jakub Boratyński, 2016. "How large and uncertain are costs of 2030 emission reduction target for the European countries? Sensitivity analysis in a global CGE model," EcoMod2016 9449, EcoMod.
    13. M. Chepeliev, 2015. "Econometric estimation of capital-labor substitution elasticities for Ukrainian CGE model," Economy and Forecasting, Valeriy Heyets, issue 2, pages 33-46.
    14. Jaume Freire-González, 2019. "Does Water Efficiency Reduce Water Consumption? The Economy-Wide Water Rebound Effect," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(6), pages 2191-2202, April.
    15. Pashkus, N., 2013. "New marketing technology: transfer of basic value as an effective mechanism of impact on stakeholders," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, July.
    16. Pashkus, M., 2013. "Investments in art: opportunities and challenges," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, July.

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    Keywords

    general equilibrium; KLEM production function; separability assumption s;
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