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Can a reduction in fuel use result from an endogenous technical progress in motor vehicles? A partial and general equilibrium analysis

Author

Listed:
  • Gioele Figus

    (CEP, Institute for International Public Policy, University of Strathclyde)

  • J Kim Swales

    (Departrment of Economics, University of Strathclyde)

  • Karen Turner

    (CEP, Institute for International Public Policy, University of Strathclyde)

Abstract

In this paper we employ a partial equilibrium approach to model private transport consumption as a household self-produced commodity formed by vehicle and fuel use. We show that under certain conditions vehicle-augmenting technical improvements can reduce fuel use. We then extend the analysis through Computable General Equilibrium simulations for the UK in order to investigate the wider implications of vehicle-augmenting efficiency improvements when prices and nominal income are endogenous. With a conventional macroeconomic approach, improvements in the efficiency of household consumption simply change the composition of household demand. However, when we adjust the consumer price index for changes in the price of private transport service (not observable via a market price), as advocated in Gordon (2016) there is an additional supply-side stimulus to competitiveness.

Suggested Citation

  • Gioele Figus & J Kim Swales & Karen Turner, 2017. "Can a reduction in fuel use result from an endogenous technical progress in motor vehicles? A partial and general equilibrium analysis," Working Papers 1705, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1705
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    References listed on IDEAS

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    Cited by:

    1. Figus, Gioele & Swales, J.Kim & Turner, Karen, 2018. "Can Private Vehicle-augmenting Technical Progress Reduce Household and Total Fuel Use?," Ecological Economics, Elsevier, vol. 146(C), pages 136-147.

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    More about this item

    Keywords

    technical progress; energy efficiency; private transport; energy service.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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