IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1015.html
   My bibliography  Save this paper

Operational and Investment Response to Energy Prices in the OECD Manufacturing Sector

Author

Abstract

This paper estimates the vintage capital model of energy demand and examines operational and investment responses to energy prices at disaggregate level using data from five OECD manufacturing industries. Applying the model to less aggregate level data helps avoiding the distortions from exogenous structural shifts and measurement errors. The results confirm the previous findings that including capital stock vintages significantly improves the econometric model's goodness of fit. Estimated own-price elasticities of energy demand vary between 0.26 and 1.00 and are economically sound. Estimated own-price investment elasticities of energy efficiency of capital stock vary between 0.03 and 0.9. The investment response to energy prices thus varies significantly across manufacturing industries, being significant in some of them and negligible in other. The results of policy simulations for the U.K. petrochemical industry (the most energy-intensive industry in the sample) indicate that total (operational and investment) own-price elasticity of energy demand is close to one.

Suggested Citation

  • Steinbuks, J. & Neuhoff, K., 2010. "Operational and Investment Response to Energy Prices in the OECD Manufacturing Sector," Cambridge Working Papers in Economics 1015, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1015
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1015.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Henriksson, Eva & Söderholm, Patrik & Wårell, Linda, 2012. "Industrial electricity demand and energy efficiency policy: The role of price changes and private R&D in the Swedish pulp and paper industry," Energy Policy, Elsevier, vol. 47(C), pages 437-446.
    3. Luis Puch & Antonia Díaz, 2012. "A Theory of Energy Use," 2012 Meeting Papers 802, Society for Economic Dynamics.
    4. Peter Egger & Sergey Nigai, 2015. "Energy Demand and Trade in General Equilibrium," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 191-213, February.

    More about this item

    Keywords

    energy efficiency; energy prices; investment; vintage capital model;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cam:camdae:1015. 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: (Jake Dyer). General contact details of provider: http://www.econ.cam.ac.uk/ .

    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.

    We have no references for this item. You can help adding them by using 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.