IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v168y2018icp118-122.html

Nonparametric estimates of the clean and dirty energy substitutability

Author

Listed:
  • Malikov, Emir
  • Sun, Kai
  • Kumbhakar, Subal C.

Abstract

In growth theory, a greater-than-one elasticity of substitution between clean and dirty energy is among key necessary conditions for long-run green economic growth. Using parametric specifications, Papageorgiou et al. (2017) provide first estimates of this fundamentally important inter-energy substitution elasticity. We extend their work by relaxing restrictive functional-form assumptions about production technologies using flexible nonparametric methods. We find that the technological substitutability between clean and dirty energy inputs may not be that strong, especially in the case of a final-goods sector for which the inter-energy elasticity of substitution statistically exceeds one for at most a third of industries/countries. Hence, the favorability of technological conditions for long-run green growth may not be corroborated by the cross-country empirical evidence as strongly as previously thought.

Suggested Citation

  • Malikov, Emir & Sun, Kai & Kumbhakar, Subal C., 2018. "Nonparametric estimates of the clean and dirty energy substitutability," Economics Letters, Elsevier, vol. 168(C), pages 118-122.
    • Handle: RePEc:eee:ecolet:v:168:y:2018:i:c:p:118-122
    DOI: 10.1016/j.econlet.2018.04.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176518301460
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2018.04.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, vol. 119(1), pages 99-130, March.
    2. J.J. Heckman & E.E. Leamer (ed.), 2001. "Handbook of Econometrics," Handbook of Econometrics, Elsevier, edition 1, volume 5, number 5.
    3. Chris Papageorgiou & Marianne Saam & Patrick Schulte, 2017. "Substitution between Clean and Dirty Energy Inputs: A Macroeconomic Perspective," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 281-290, May.
    4. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wegayehu Fitawek & Sheryl L. Hendriks, 2021. "Evaluating the Impact of Large-Scale Agricultural Investments on Household Food Security Using an Endogenous Switching Regression Model," Land, MDPI, vol. 10(3), pages 1-19, March.
    2. Francesca Rubiconto, 2023. "Is environmental innovation the key to addressing the dual economic and sustainability challenge of the Italian economy?," Journal of Evolutionary Economics, Springer, vol. 33(3), pages 869-892, July.
    3. Lin Zhao, 2023. "The impact of China's Differential Electricity Pricing policy on fossil fuel consumption," International Studies of Economics, John Wiley & Sons, vol. 18(1), pages 97-119, March.
    4. Fitawek, Wegayehu & Hendriks, Sheryl L., 2023. "The role of contract farming on household food security in Kenya and Madagascar," 2023 Seventh AAAE/60th AEASA Conference, September 18-21, 2023, Durban, South Africa 365943, African Association of Agricultural Economists (AAAE).
    5. Neves José Pedro Bastos & Semmler Willi, 2025. "A Carbon Wealth Tax: Modelling, Empirics, and Policy," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 245(6), pages 643-672.
    6. H. Schwerin, 2025. "Long-run substitutability between fossil and renewable energy: global evidence 1800–2012," Empirical Economics, Springer, vol. 69(1), pages 129-148, July.
    7. Wonder Agbenyo & Yuansheng Jiang & Xinxin Jia & Jingyi Wang & Gideon Ntim-Amo & Rahman Dunya & Anthony Siaw & Isaac Asare & Martinson Ankrah Twumasi, 2022. "Does the Adoption of Climate-Smart Agricultural Practices Impact Farmers’ Income? Evidence from Ghana," IJERPH, MDPI, vol. 19(7), pages 1-25, March.
    8. repec:diw:diwwpp:dp1886 is not listed on IDEAS
    9. Shan Wang & Keyu Zhang, 2025. "Research on the Nested Structure and Substitution Elasticity of China’s Power Energy Sources," Sustainability, MDPI, vol. 17(3), pages 1-22, January.
    10. repec:diw:diwwpp:dp1885 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Schoder & Remzi Baris Tercioglu, 2024. "A climate-fiscal policy mix to achieve Türkiye’s net-zero ambition under feasibility constraints," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 21(2), pages 331-359, April.
    2. Derek Lemoine, 2024. "Innovation-Led Transitions in Energy Supply," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(1), pages 29-65, January.
    3. Fries, Steven, 2023. "Sequencing decarbonization policies to manage their macroeconomic impacts," INET Oxford Working Papers 2023-26, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    4. Huang, Bihong & Punzi, Maria Teresa & Wu, Yu, 2022. "Environmental regulation and financial stability: Evidence from Chinese manufacturing firms," Journal of Banking & Finance, Elsevier, vol. 136(C).
    5. Marco Carli, 2025. "Green Ambiguity," CEIS Research Paper 591, Tor Vergata University, CEIS, revised 05 Feb 2025.
    6. Jo, Ara & Miftakhova, Alena, 2024. "How constant is constant elasticity of substitution? Endogenous substitution between clean and dirty energy," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    7. Benmir, Ghassane & Mori, Aditya & Roman, Josselin & Tarsia, Romano, 2025. "Beneath the trees: the influence of natural capital on shadow price dynamics in a macroeconomic model with uncertainty," LSE Research Online Documents on Economics 128516, London School of Economics and Political Science, LSE Library.
    8. Campiglio, Emanuele & Spiganti, Alessandro & Wiskich, Anthony, 2024. "Clean innovation, heterogeneous financing costs, and the optimal climate policy mix," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    9. Yang, Jun & Yang, Dingjian & Cheng, Jixin, 2024. "The non-rivalry of data, directed technical change and the environment: A theoretical study incorporating data as a production factor," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 417-448.
    10. Peter K. Kruse-Andersen, 2019. "Directed Technical Change, Environmental Sustainability, and Population Growth," Discussion Papers 19-12, University of Copenhagen. Department of Economics.
    11. Jin, Wei & Shi, Xunpeng & Zhang, Lin, 2021. "Energy transition without dirty capital stranding," Energy Economics, Elsevier, vol. 102(C).
    12. Mei Lu & Michael G Pollitt, 2025. "Will high carbon prices reduce fossil fuel use in China? Evidence from price elasticity estimates using firm data," Working Papers EPRG2508, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    13. Emanuele Campiglio & Alessandro Spiganti & Anthony Wiskich, 2023. "Clean innovation and heterogeneous financing costs," Working Papers 2023: 07, Department of Economics, University of Venice "Ca' Foscari".
    14. Lazkano, Itziar & Nøstbakken, Linda & Pelli, Martino, 2017. "From fossil fuels to renewables: The role of electricity storage," European Economic Review, Elsevier, vol. 99(C), pages 113-129.
    15. George, Ammu & Huang, Jingong & Xie, Taojun, 2022. "Assessing the dual mandates of sustainability-linked monetary policy," Energy Economics, Elsevier, vol. 113(C).
    16. Lazkano, Itziar & Pham, Linh, 2016. "Do Fossil fuel Taxes Promote Innovation in Renewable Electricity Generation?," Discussion Paper Series in Economics 16/2016, Norwegian School of Economics, Department of Economics.
    17. Dietz, Simon & Lanz, Bruno, 2025. "Growth and adaptation to climate change in the long run," European Economic Review, Elsevier, vol. 173(C).
    18. Garcia-Villegas, Salomon & Martorell, Enric, 2024. "Climate transition risk and the role of bank capital requirements," Economic Modelling, Elsevier, vol. 135(C).
    19. Alena Miftakhova & Clément Renoir, 2021. "Economic Growth and Equity in Anticipation of Climate Policy," CER-ETH Economics working paper series 21/355, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    20. repec:diw:diwwpp:dp1885 is not listed on IDEAS
    21. Coenen, Günter & Lozej, Matija & Priftis, Romanos, 2024. "Macroeconomic effects of carbon transition policies: An assessment based on the ECB’s New Area-Wide Model with a disaggregated energy sector," European Economic Review, Elsevier, vol. 167(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:168:y:2018:i:c:p:118-122. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.