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Costly Capital Reallocation and Energy Use

Author

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  • Antonia Diaz

    (Universidad Carlos III)

  • Luis A. Puch

    (Universidad Complutense de Madrid)

  • Maria D. Guillo

    (Universidad de Alicante)

Abstract

In times series data, energy use does not change much with energy price changes. However, energy use is responsive to international differences in energy prices in cross-section data across countries. In this paper we consider a model of energy use in which production takes place at individual plants and capital can be used either to directly produce output or to reduce the energy required to run the plant. We assume that reallocating capital from one use to another is costly. This turns out to be crucial for the quantitative properties of the model to be is conformity with the low short-run and high long-run elasticities of energy use seen in data. (Copyright: Elsevier)

Suggested Citation

  • Antonia Diaz & Luis A. Puch & Maria D. Guillo, 2004. "Costly Capital Reallocation and Energy Use," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 494-518, April.
    • Handle: RePEc:red:issued:v:7:y:2004:i:2:p:494-518
    DOI: 10.1016/j.red.2003.09.005
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    Citations

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    Cited by:

    1. Guerrero-Lemus, Ricardo & Marrero, Gustavo A. & Puch, Luis A., 2012. "Costs for conventional and renewable fuels and electricity in the worldwide transport sector: A mean–variance portfolio approach," Energy, Elsevier, vol. 44(1), pages 178-188.
    2. Luisa Fernanda Gutierrez & Gustavo A. Marrero & Luis A. Puch, 2010. "Los efectos medioambientales del boom y el parón inmobiliario," Economic Reports 01-2010, FEDEA.
    3. Antonia Díaz & Luis A. Puch, 2013. "A Theory of Vintage Capital Investment and Energy Use," Documentos de Trabajo del ICAE 2013-35, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    4. Luis A. Puch & Antonia Díaz, 2007. "Plants, Vintage Capital and Energy Use," 2007 Meeting Papers 411, Society for Economic Dynamics.
    5. Díaz Antonia & Puch Luis A., 2019. "Investment, technological progress and energy efficiency," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(2), pages 1-28, June.
    6. Luis Puch & Antonia Díaz, 2012. "A Theory of Energy Use," 2012 Meeting Papers 802, Society for Economic Dynamics.
    7. Claudia S. Gómez-López & Luis A. Puch, 2008. "Uso de Energía en Economías Exportadoras de Petróleo," Economic Reports 24-08, FEDEA.
    8. Díaz, Antonia & Marrero, Gustavo A. & Puch, Luis A. & Rodríguez, Jesús, 2019. "Economic growth, energy intensity and the energy mix," Energy Economics, Elsevier, vol. 81(C), pages 1056-1077.
    9. Federico Revelli, 2012. "Business taxation and economic performance in hierarchical government structures," Working Papers 2012/12, Institut d'Economia de Barcelona (IEB).
    10. Antonia Díaz & Gustavo A. Marrero & Luis Puch & Jesús Rodríguez-López, 2018. "A Note on Growth, Energy Intensity and the Energy Mix: A Dynamic Panel Data Analysis," Working Papers 18.08, Universidad Pablo de Olavide, Department of Economics.
    11. J. Barrera-Santana & Gustavo A. Marrero & Luis A. Puch & Antonia Díaz, 2021. "CO2 emissions and energy technologies in Western Europe," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(2), pages 105-150, June.
    12. Barrera-Santana, J. & Marrero, Gustavo A. & Ramos-Real, Francisco J., 2022. "Income, energy and the role of energy efficiency governance," Energy Economics, Elsevier, vol. 108(C).
    13. Teresa Sousa, 2011. "International macroeconomic interdependence and imports of oil in a small open economy," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 10(1), pages 35-60, April.
    14. Delalibera, Bruno R. & Serrano-Quintero, Rafael & Zimmermann, Guilherme G., 2023. "Reforms in the natural gas sector and economic development," Economic Modelling, Elsevier, vol. 125(C).
    15. Revelli Federico, 2012. "Business taxation and economic performance in hierarchical government structures," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201204, University of Turin.

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    More about this item

    Keywords

    energy price; energy use; capital reallocation; number of plants.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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