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Solow meets Leontief: Economic growth and energy consumption

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  • Arbex, Marcelo
  • Perobelli, Fernando S.

Abstract

This paper proposes a methodology that integrates a growth model with an input-output model to analyze the impacts of economic growth on the consumption of energy. The integration between the models is carried out by calibrating the growth module, which incorporates energetic inputs (renewable and nonrenewable) in the production function, and implementing shocks by the supply side (capital, labor, renewable and nonrenewable energy) in the input-output model. This allows us to verify the pattern of energy consumption for each sector in the input-output matrix. We apply this methodology to study the energy consumption of eleven economic sectors in Brazil, using data from the Brazilian National Accounts and Input-Output Matrix (IBGE) and the National Energy Report (BEN). We conduct experiments involving changes in technological progress growth rate, extraction and regeneration rates of both renewable and nonrenewable resources and population growth to analyze the impact of changes in the parameters of the model on the sectoral output growth rate and, consequently, on the consumption of energy in each economic sector.

Suggested Citation

  • Arbex, Marcelo & Perobelli, Fernando S., 2010. "Solow meets Leontief: Economic growth and energy consumption," Energy Economics, Elsevier, vol. 32(1), pages 43-53, January.
  • Handle: RePEc:eee:eneeco:v:32:y:2010:i:1:p:43-53
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