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Hicksian Traverse Revisited: Conditions for the Energy Transition

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  • Adrien Nguyen-Huu

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

  • Antonin Pottier

    (EHESS - École des hautes études en sciences sociales)

Abstract

In this article, we analyze the transition dynamics, what Hicks called the traverse, from one equilibrium toward another one, and the conditions for such a transfer in a bi-sectoral economy under technological shocks. To this end, we revisit the Hick Traverse model and add to it inter-sectoral relations in the form of intersectoral consumption of energy for both the energy and the manufacturing sector. We investigate two distinct assumptions about consumption behavior of manufactured goods. We show that our model extends Hicks' one and leads to the same condition for a good traverse path, independently from the net energy return. We highlight that energy production technologies nevertheless provide constrains on viable states of the economy and its maximal growth rate, and that energy consumption technologies impact investment and prices crucially.

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  • Adrien Nguyen-Huu & Antonin Pottier, 2019. "Hicksian Traverse Revisited: Conditions for the Energy Transition," Working Papers hal-01966173, HAL.
    • Handle: RePEc:hal:wpaper:hal-01966173
    Note: View the original document on HAL open archive server: https://hal.science/hal-01966173v2
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    References listed on IDEAS

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    1. Nardini, Franco, 1990. "Cycle-trend dynamics in a fixwage neo-Austrian model of traverse," Structural Change and Economic Dynamics, Elsevier, vol. 1(1), pages 165-194, June.
    2. Michael A. Landesmann & Roberto Scazzieri, 1993. "Commodity Flows and Productive Subsystems: An Essay in the Analysis of Structural Change," Palgrave Macmillan Books, in: Mauro Baranzini & G. C. Harcourt (ed.), The Dynamics of the Wealth of Nations, chapter 8, pages 209-245, Palgrave Macmillan.
    3. Nguyen-Huu, Adrien & Pottier, Antonin, 2020. "Hicksian traverse revisited: Conditions for the energy transition," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 102-111.
    4. Lavoie, Marc & Ramirez-Gaston, Pablo, 1997. "Traverse in a Two-Sector Kaleckian Model of Growth with Target-Return Pricing," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(2), pages 145-169, March.
    5. Grasselli, Matheus R. & Nguyen-Huu, Adrien, 2018. "Inventory growth cycles with debt-financed investment," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 1-13.
    6. Bhaduri, Amit, 1975. "On the Analogy between the Quantity- and the Price-Traverse," Oxford Economic Papers, Oxford University Press, vol. 27(3), pages 455-461, November.
    7. Henry, J. & Lavoie, M., 1997. "The Hicksian traverse as a process of reproportioning: some structural dynamics," Structural Change and Economic Dynamics, Elsevier, vol. 8(2), pages 157-175, June.
    8. Jean-François Fagnart & Marc Germain, 2016. "Net energy ratio, EROEI and the macroeconomy," Post-Print hal-02987074, HAL.
    9. Fagnart, Jean-François & Germain, Marc, 2016. "Net energy ratio, EROEI and the macroeconomy," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 121-126.
    10. Solow, R M, 1984. "Mr. Hicks and the Classics," Oxford Economic Papers, Oxford University Press, vol. 36(0), pages 13-25, Supplemen.
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    Cited by:

    1. Nguyen-Huu, Adrien & Pottier, Antonin, 2020. "Hicksian traverse revisited: Conditions for the energy transition," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 102-111.
    2. Raphaël Soubeyran, 2019. "Incentives, pro-social preferences and discrimination," CEE-M Working Papers hal-02056347, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.

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    Keywords

    Hicks Traverse; fixed production technology; equilibrium analysis; traverse analysis; energy economy; sectoral economy;
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