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Energy distribution and economic growth


  • Dalgaard, Carl-Johan
  • Strulik, Holger


This research examines the physical constraints on the growth process. In order to run, maintain and build capital energy is required to be distributed to geographically dispersed sites where investments are deemed profitable. We capture this aspect of physical reality by a network theory of electricity distribution. The model leads to a supply relation according to which feasible electricity consumption per capita rises with the size of the economy, as measured by capital per capita. Specifically, the relation is a simple power law with an exponent assigned to capital that is bounded between 1/2 and 3/4, depending on the efficiency of the network. Together with an energy conservation equation, capturing instantaneous aggregate demand for electricity, we are able to provide a metabolic-energetic founded law of motion for capital per capita that is mathematically isomorphic to the one emanating from the Solow growth model. Using data for the 50 US states 1960–2000, we examine the determination of growth in electricity consumption per capita and test the model structurally. The model fits the data well. The exponent in the power law connecting capital and electricity is 2/3.

Suggested Citation

  • Dalgaard, Carl-Johan & Strulik, Holger, 2011. "Energy distribution and economic growth," Resource and Energy Economics, Elsevier, vol. 33(4), pages 782-797.
  • Handle: RePEc:eee:resene:v:33:y:2011:i:4:p:782-797
    DOI: 10.1016/j.reseneeco.2011.04.004

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    References listed on IDEAS

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    Cited by:

    1. Elliott, Robert J.R. & Sun, Puyang & Xu, Qiqin, 2015. "Energy distribution and economic growth: An empirical test for China," Energy Economics, Elsevier, vol. 48(C), pages 24-31.
    2. repec:eee:eneeco:v:68:y:2017:i:c:p:31-43 is not listed on IDEAS
    3. Pauliuk, Stefan & Hertwich, Edgar G., 2015. "Socioeconomic metabolism as paradigm for studying the biophysical basis of human societies," Ecological Economics, Elsevier, vol. 119(C), pages 83-93.
    4. Carlo Bianca & Massimiliano Ferrara & Luca Guerrini, 2014. "High-order moments conservation in thermostatted kinetic models," Journal of Global Optimization, Springer, vol. 58(2), pages 389-404, February.

    More about this item


    Economic growth; Energy; Power laws; Networks;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy


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