IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v34y2012i6p2200-2208.html
   My bibliography  Save this article

Modeling international trends in energy efficiency

Author

Listed:
  • Stern, David I.

Abstract

I use a stochastic production frontier to model energy efficiency trends in 85 countries over a 37-year period. Differences in energy efficiency across countries are modeled as a stochastic function of explanatory variables and I estimate the model using the cross-section of time-averaged data, so that no structure is imposed on technological change over time. Energy efficiency is measured using a new energy distance function approach. The country using the least energy per unit output, given its mix of outputs and inputs, defines the global production frontier. A country's relative energy efficiency is given by its distance from the frontier—the ratio of its actual energy use to the minimum required energy use, ceteris paribus. Energy efficiency is higher in countries with, inter alia, higher total factor productivity, undervalued currencies, and smaller fossil fuel reserves and it converges over time across countries. Globally, technological change was the most important factor counteracting the energy-use and carbon-emissions increasing effects of economic growth.

Suggested Citation

  • Stern, David I., 2012. "Modeling international trends in energy efficiency," Energy Economics, Elsevier, vol. 34(6), pages 2200-2208.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:6:p:2200-2208 DOI: 10.1016/j.eneco.2012.03.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988312000539
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, January.
    2. Chu Wei & Jinlan Ni & Manhong Shen, 2009. "Empirical Analysis of Provincial Energy Efficiency in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(5), pages 88-103.
    3. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, pages 3-28.
    4. Fredriksson, Per G. & Vollebergh, Herman R. J. & Dijkgraaf, Elbert, 2004. "Corruption and energy efficiency in OECD countries: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 207-231, March.
    5. Daniel C. Matisoff, 2008. "The Adoption of State Climate Change Policies and Renewable Portfolio Standards: Regional Diffusion or Internal Determinants?," Review of Policy Research, Policy Studies Organization, vol. 25(6), pages 527-546, December.
    6. Kenneth Gillingham & Richard G. Newell & Karen Palmer, 2009. "Energy Efficiency Economics and Policy," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 597-620, September.
    7. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, pages 285-332.
    8. Markus Eberhardt & Francis Teal, 2011. "Econometrics For Grumblers: A New Look At The Literature On Cross‐Country Growth Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 109-155, February.
    9. William Hauk & Romain Wacziarg, 2009. "A Monte Carlo study of growth regressions," Journal of Economic Growth, Springer, vol. 14(2), pages 103-147, June.
    10. David I. Stern, 2005. "The Effect of NAFTA on Energy and Environmental Efficiency in Mexico," Rensselaer Working Papers in Economics 0511, Rensselaer Polytechnic Institute, Department of Economics.
    11. Stern, David I., 2010. "Energy quality," Ecological Economics, Elsevier, vol. 69(7), pages 1471-1478, May.
    12. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, pages 3-28.
    13. Diego Comin & Bart Hobijn, 2010. "An Exploration of Technology Diffusion," American Economic Review, American Economic Association, pages 2031-2059.
    14. Massimo Filippini & Lester C. Hunt, 2011. "Energy Demand and Energy Efficiency in the OECD Countries: A Stochastic Demand Frontier Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 59-80.
    15. Stern, David I. & Common, Michael S., 2001. "Is There an Environmental Kuznets Curve for Sulfur?," Journal of Environmental Economics and Management, Elsevier, vol. 41(2), pages 162-178, March.
    16. Martin L. Weitzman, 2011. "Additive Damages, Fat-Tailed Climate Dynamics, and Uncertain Discounting," NBER Chapters,in: The Economics of Climate Change: Adaptations Past and Present, pages 23-46 National Bureau of Economic Research, Inc.
    17. Jess Benhabib & Mark M. Spiegel, 2002. "Human capital and technology diffusion," Proceedings, Federal Reserve Bank of San Francisco.
    18. Wang, Chunhua, 2011. "Sources of energy productivity growth and its distribution dynamics in China," Resource and Energy Economics, Elsevier, vol. 33(1), pages 279-292, January.
    19. Larry E. Jones & Rodolfo E. Manuelli, 2000. "Endogenous policy choice: the case of pollution and growth," Staff Report 276, Federal Reserve Bank of Minneapolis.
    20. Kenneth B. Medlock III & Ronald Soligo, 2001. "Economic Development and End-Use Energy Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 77-105.
    21. James D. Adams, 2005. "Industrial R&D Laboratories: Windows on Black Boxes?," The Journal of Technology Transfer, Springer, vol. 30(2_2), pages 129-137, January.
    22. Diego A. Comin & Martí Mestieri, 2010. "An Intensive Exploration of Technology Diffusion," NBER Working Papers 16379, National Bureau of Economic Research, Inc.
    23. Lescaroux, François, 2011. "Dynamics of final sectoral energy demand and aggregate energy intensity," Energy Policy, Elsevier, vol. 39(1), pages 66-82, January.
    24. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
    25. Le Pen, Yannick & Sévi, Benoît, 2010. "On the non-convergence of energy intensities: Evidence from a pair-wise econometric approach," Ecological Economics, Elsevier, vol. 69(3), pages 641-650, January.
    26. Rolf Färe & Carlos Martins-Filho & Michael Vardanyan, 2010. "On functional form representation of multi-output production technologies," Journal of Productivity Analysis, Springer, pages 81-96.
    27. Lewis S. Davis & Emily Lacroix, 2011. "Legal origin and the evolution of environmental quality," Economics Bulletin, AccessEcon, vol. 31(4), pages 2968-2974.
    28. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, pages 79-113.
    29. Larry E. Jones & Rodolfo E. Manuelli, 2001. "Endogenous Policy Choice: The Case of Pollution and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 369-405, July.
    30. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, pages 285-332.
    31. Stern, David I., 2010. "Between estimates of the emissions-income elasticity," Ecological Economics, Elsevier, vol. 69(11), pages 2173-2182, September.
    32. Comin, D. & Hobijn, B., 2004. "Cross-country technology adoption: making the theories face the facts," Journal of Monetary Economics, Elsevier, pages 39-83.
    33. Stern, David I., 2002. "Explaining changes in global sulfur emissions: an econometric decomposition approach," Ecological Economics, Elsevier, vol. 42(1-2), pages 201-220, August.
    34. Breusch, Trevor & Ward, Michael B. & Nguyen, Hoa Thi Minh & Kompas, Tom, 2011. "On the Fixed-Effects Vector Decomposition," Political Analysis, Cambridge University Press, pages 123-134.
    35. repec:dau:papers:123456789/6801 is not listed on IDEAS
    36. Julio J. Rotemberg, 2003. "Stochastic Technical Progress, Smooth Trends, and Nearly Distinct Business Cycles," American Economic Review, American Economic Association, pages 1543-1559.
    37. Benhabib, Jess & Spiegel, Mark M., 2005. "Human Capital and Technology Diffusion," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 13, pages 935-966 Elsevier.
    38. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    39. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, pages 3-26.
    40. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, pages 325-332.
    41. Common,Michael, 1995. "Sustainability and Policy," Cambridge Books, Cambridge University Press, number 9780521436052, December.
    42. Rolf Färe & Carlos Martins-Filho & Michael Vardanyan, 2010. "On functional form representation of multi-output production technologies," Journal of Productivity Analysis, Springer, pages 81-96.
    43. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, December.
    44. Zhou, Nan & Levine, Mark D. & Price, Lynn, 2010. "Overview of current energy-efficiency policies in China," Energy Policy, Elsevier, vol. 38(11), pages 6439-6452, November.
    45. Ang, B.W., 2006. "Monitoring changes in economy-wide energy efficiency: From energy-GDP ratio to composite efficiency index," Energy Policy, Elsevier, vol. 34(5), pages 574-582, March.
    46. Cleveland, Cutler J. & Kaufmann, Robert K. & Stern, David I., 2000. "Aggregation and the role of energy in the economy," Ecological Economics, Elsevier, vol. 32(2), pages 301-317, February.
    47. Kenneth Kasa, 2004. "Learning, Large Deviations, And Recurrent Currency Crises," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(1), pages 141-173, February.
    48. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, pages 3-26.
    49. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-286, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Energy; Efficiency; Carbon emissions; Technological change; Between estimator; Stochastic frontier;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    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:eneeco:v:34:y:2012:i:6:p:2200-2208. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/eneco .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.