IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The Energy-Capital Complementarity Debate: An Example of a Bootstrapped Sensitivity Analysis

  • Raj, Baldev

    (Department of Economics, Wilfried Laurier University, Waterloo, Ontario)

  • Veall, Michael R.

    (Department of Economics, McMaster University, Hamilton, Ontario)

The aggregate production function approach is one way to forecast future energy demand (a step in forecasting carbon dioxide emissions, for example) and to analyze the aggregate economic effects of measures such as the increase of taxes on energy use. The results of such an approach tend to hinge on whether energy and capital are substitutes, implying that increases in energy prices will increase the demand for capital stock or are complements, implying that increases in energy prices will reduce the demand for capital stock. In a famous but controversial paper, Berndt and Wood (1975) find energy and capital are complements using aggregate time series manufacturing data for the United States, 1947-1971. Ilmakunnas (1986) shows that much of this analysis is sensitive to the imposition of theoretical economic restrictions and provides a range of point estimates in a sensitivity analysis. The current paper discusses these issues further and taking the Berndt-Wood study as an empirical example, shows that the estimation sensitivity is due to one particular set of restrictions known as symmetry restrictions and provides a bootstrap analysis which suggests that estimation sensitivity is almost entirely in the means of the sampling distributions and not in their shapes or degrees of dispersion.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ihs.ac.at/publications/eco/es-23.pdf
File Function: First version, 1996
Download Restriction: no

Paper provided by Institute for Advanced Studies in its series Economics Series with number 23.

as
in new window

Length: 14 pages
Date of creation: Feb 1996
Date of revision:
Handle: RePEc:ihs:ihsesp:23
Contact details of provider: Postal: Stumpergasse 56, A-1060 Vienna, Austria
Phone: ++43 - (0)1 - 599 91 - 0
Fax: ++43 - (0)1 - 599 91 - 555
Web page: http://www.ihs.ac.at

More information through EDIRC

Order Information: Postal: Institute for Advanced Studies - Library, Stumpergasse 56, A-1060 Vienna, Austria

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ihs:ihsesp:23. 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: (Doris Szoncsitz)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.