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Energy-Saving Technology Shocks, Emissions, and the Macroeconomy

Author

Listed:
  • Emanuel Moench

    (Frankfurt School of Finance & Management, CEPR)

  • Soroosh Soofi-Siavash

    (Lietuvos Bankas, Vilnius University)

Abstract

We use restrictions derived from frontier models of directed technical change to identify an energy-saving technology shock in a Bayesian structural VAR of the U.S. economy. This shock is associated with a persistent reduction of the carbon intensity of output. It also leads to a delayed but strong increase of GDP which gives rise to substantial additional fossil fuel consumption and new emissions. As a result, per capita emissions fully rebound after an initial decline. These effects can largely be attributed to a substitution of fossil fuel end-use by electricity, much of which has historically been generated using fossil fuels.

Suggested Citation

  • Emanuel Moench & Soroosh Soofi-Siavash, 2025. "Energy-Saving Technology Shocks, Emissions, and the Macroeconomy," Bank of Lithuania Working Paper Series 134, Bank of Lithuania.
    • Handle: RePEc:lie:wpaper:134
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    More about this item

    Keywords

    energy-saving technology shocks; carbon emissions; structural vector autoregressions;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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