Costly capital reallocation and energy use
AbstractIn time series data, energy use does not change much with energy price changes. However, energy use is responsive to international differences in energy prices in cross-section data across countries. In this paper we consider a model of energy use in which production takes place at individual plants and capital can be used either to directly produce output or to reduce the energy required to run the planto We assume that reallocating capital from one use to another is costly. This turns out to be crucial for the quantitative properties of the model to be in conformity with the low short-mn and high long-run elasticities of energy use seen in data. Furthermore, our model displays variations in capacity utilization that are in line with those observed during the period of major oil price increases.
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Bibliographic InfoPaper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales in its series Documentos del Instituto Complutense de Análisis Económico with number 0111.
Date of creation: 2001
Date of revision:
Energy price; Energy use; Costly capital reallocation; Number of plants.;
Other versions of this item:
- Díaz, Antonia & Puch, Luis A. & Guilló, M. Dolores, . "Costly capital reallocation and enery use," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/4943, Universidad Carlos III de Madrid.
- Puch, Luis A. & Díaz, Antonia & Guilló, María D., . "Costly capital reallocation and energy use," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/259, Universidad Carlos III de Madrid.
- María Dolores Guilló & Antonia Díaz & Luis A. Puch, 2002. "Costly Capital Reallocation And Enery Use," Working Papers. Serie AD 2002-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Luis A. Puch & Antonia Díaz & María D. Guilló, 2001. "Costly Capital Reallocation And Energy Use," Economics Working Papers we015215, Universidad Carlos III, Departamento de Economía.
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E23 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Production
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-10-12 (All new papers)
- NEP-COM-2003-10-12 (Industrial Competition)
- NEP-DGE-2003-10-12 (Dynamic General Equilibrium)
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