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Decomposition of US manufacturing energy intensity and elasticities of components with respect to energy prices

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  • Lescaroux, François

Abstract

This paper proposes an analysis of changes in the US manufacturing energy intensity between 1974 and 1998. The starting point is a three-term decomposition of an intensity index which evaluates annually the respective contributions of changes in industrial structure, efficiency gains at the sectoral level and substitution between energy resources to aggregate productivity improvements. Then, we study the time paths followed by each of these three components: using spectral analysis techniques, we show that they behave very differently as the structural influence plays a part mainly in the short-run, substitution between energy resources acts principally in the long-run and the changes in sectoral intensity cause both trend-variations and cyclical ones. Finally, we focus on the effect of energy price evolution on each of the three components. Allowing energy price rises and decreases to have asymmetric effects, we estimate both the long-run impacts and the short-run adjustments.

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  • Lescaroux, François, 2008. "Decomposition of US manufacturing energy intensity and elasticities of components with respect to energy prices," Energy Economics, Elsevier, vol. 30(3), pages 1068-1080, May.
    • Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1068-1080
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