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Factor-Augmenting Technical Change: an Empirical Assessment

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  • Carlo Carraro

    ()
    (Department of Economics, University Of Venice Cà Foscari)

  • Enrica De Cian

    ()
    (University of Venice, Fondazione Enrico Mattei)

Abstract

This paper estimates factor-specific technical change and input substitution using a structural approach. It improves upon the existing literature by introducing technology drivers for factor productivities and by assessing the impact of endogenous technical change on the estimates of substitution elasticities. The empirical results suggest that factor-productivities are indeed endogenous. In addition, technology drivers are factor-specific. Whereas R&D investments and machinery imports are important determinants of energy and capital productivity, education is found to be statistically related to labour productivity. The rate of energy-augmenting technical change is larger than that of either labour or capital. By contrast, the productivity of these two factors grows at similar rates. Estimates of the elasticities of substitution are within the ranges identified by previous literature. In addition, our results suggest that endogenous technical change lowers the estimated values of the substitution elasticity.

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Bibliographic Info

Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2009_29.

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Length: 32
Date of creation: 2009
Date of revision:
Handle: RePEc:ven:wpaper:2009_29

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Keywords: Technical change; Technology spillovers; Endogenous growth; Panel regression;

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References

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  1. Anil Markandya & S. Pedroso, 2005. "How Substitutable is Natural Capital?," Working Papers 2005.88, Fondazione Eni Enrico Mattei.
  2. Sanstad, Alan H. & Roy, Joyashree & Sathaye, Jayant A., 2006. "Estimating energy-augmenting technological change in developing country industries," Energy Economics, Elsevier, vol. 28(5-6), pages 720-729, November.
  3. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  4. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
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  8. van der Werf, Edwin, 2008. "Production functions for climate policy modeling: An empirical analysis," Energy Economics, Elsevier, vol. 30(6), pages 2964-2979, November.
  9. Nadiri, M Ishaq, 1970. "Some Approaches to the Theory and Measurement of Total Factor Productivity: A Survey," Journal of Economic Literature, American Economic Association, vol. 8(4), pages 1137-77, December.
  10. Slade, Margaret E., 1989. "Modelling stochastic and cyclical components of technical change : An application of the Kalman filter," Journal of Econometrics, Elsevier, vol. 41(3), pages 363-383, July.
  11. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
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  13. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 781-809, October.
  14. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-79, May.
  15. John W. Kendrick, 1956. "Productivity Trends: Capital and Labor," NBER Books, National Bureau of Economic Research, Inc, number kend56-1, May.
  16. Cameron, Gavin & Proudman, James & Redding, Stephen, 2005. "Technological convergence, R&D, trade and productivity growth," European Economic Review, Elsevier, vol. 49(3), pages 775-807, April.
  17. Jorgenson, Dale W & Fraumeni, Barbara M, 1992. " Investment in Education and U.S. Economic Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S51-70, Supplemen.
  18. Edenhofer, Ottmar & Bauer, Nico & Kriegler, Elmar, 2005. "The impact of technological change on climate protection and welfare: Insights from the model MIND," Ecological Economics, Elsevier, vol. 54(2-3), pages 277-292, August.
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Citations

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Cited by:
  1. Enrica De Cian & Ramiro Parrado, 2012. "Technology Spillovers Embodied in International Trade: Intertemporal, regional and sectoral effects in a global CGE," Working Papers 2012.27, Fondazione Eni Enrico Mattei.
  2. Carlo Carraro & Enrica De Cian & Massimo Tavoni, 2009. "Human Capital Formation and Global Warming Mitigation: Evidence from an Integrated Assessment Model," CESifo Working Paper Series 2874, CESifo Group Munich.
  3. Gnidchenko, Andrey, 2011. "Моделирование Технологических И Институциональных Эффектов В Макроэкономическом Прогнозировании
    [Technologica
    ," MPRA Paper 35484, University Library of Munich, Germany, revised May 2011.
  4. Hübler, Michael & Glas, Alexander, 2013. "The energy-bias of North-South technology spillovers: A global, bilateral, bisectoral trade analysis," ZEW Discussion Papers 13-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Carlo Carraro & Enrica De Cian & Lea Nicita, 2009. "Modeling Biased Technical Change. Implications For Climate Policy," Working Papers 2009_27, Department of Economics, University of Venice "Ca' Foscari".

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