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Productivity Trends and the Cost of Reducing CO2 Emissions


  • William W. Hogan
  • Dale W. Jorgenson


Adequate control of CO2 emissions may require a significant increase in energy price, which in turn wilt create long-term economic costs. This paper explores the effects of long-term productivity trends in the U.S. economy and relates them to the cost of reducing CO2 emissions. Technology change has been negatively correlated with energy prices and positively correlated with materials prices. Thus, if all prices remain constant expenditures on materials per unit of output will decline, and expenditures on energy per unity of output will increase. If energy prices increase, the rate of productivity growth will decrease. This trend will be very small, if measured on an annual basis, but eventually could be quite significant. A comparison with recent cost estimates of CO2 emission control suggests that this otherwise ignored productivity effect could be the largest component of a complete cost analysis.

Suggested Citation

  • William W. Hogan & Dale W. Jorgenson, 1991. "Productivity Trends and the Cost of Reducing CO2 Emissions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 67-86.
  • Handle: RePEc:aen:journl:1991v12-01-a05

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    References listed on IDEAS

    1. Berndt, Ernst R, 1976. "Reconciling Alternative Estimates of the Elasticity of Substitution," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 59-68, February.
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    3. Ronald E. Findlay & Carlos Alfredo Rodriguez, 1977. "Intermediate Imports and Macroeconomic Policy under Flexible Exchange Rates," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 208-217, May.
    4. Hall, Robert E, 1978. "The Macroeconomic Impact of Changes in Income Taxes in the Short and Medium Runs," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 71-85, April.
    5. Hall, Robert E & Lilien, David M, 1979. "Efficient Wage Bargains under Uncertain Supply and Demand," American Economic Review, American Economic Association, vol. 69(5), pages 868-879, December.
    6. Stephen M. Goldfeld, 1976. "The Case of the Missing Money," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 683-740.
    7. Daniel J.B. Mitchell, 1978. "Union Wage Determination: Policy Implications and Outlook," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(3), pages 537-582.
    8. Robert J. Gordon, 1970. "The Recent Acceleration of Inflation and Its Lessons for the Future," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 1(1), pages 8-47.
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    JEL classification:

    • F0 - International Economics - - General


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