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Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today

Author

Listed:
  • Frieling, Julius

    () (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    () (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

We analyze the relationship between factor augmenting technical change and factor substitution through a nested CES function using capital, labor, and energy inputs. We use US aggregate data on output, factor use, and factor prices for the years 1929–2015 to show the interdependence and coevolution of the different input factors. We demonstrate the robustness of the system of equations approach for estimating such a production function. We find that the input factors are gross complements, and that in the time period considered, technical change was mostly labor saving, while the linear time trend of energy augmenting technical change was zero.

Suggested Citation

  • Frieling, Julius & Madlener, Reinhard, 2017. "Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today," FCN Working Papers 2/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  • Handle: RePEc:ris:fcnwpa:2017_002
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    References listed on IDEAS

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    3. Kirmas, Alexander & Madlener, Reinhard, 2017. "Economic Viability of Second-Life Electric Vehicle Batteries for Energy Storage in Private Households," FCN Working Papers 7/2016, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
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    6. Robert S. Chirinko, 2008. "ó: The Long And Short Of It," CESifo Working Paper Series 2234, CESifo Group Munich.
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    8. Stephan B. Bruns, Christian Gross and David I. Stern, 2014. "Is There Really Granger Causality Between Energy Use and Output?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
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    15. Franzen, Stefan & Madlener, Reinhard, 2016. "Optimal Expansion of a Hydrogen Storage System for Wind Power: A Real Options Analysis," FCN Working Papers 52/2016, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    16. Falcke, Florian & Madlener, Reinhard, 2016. "Potential Impacts of the Planned Market Stability Reserve on Speculators’ Behavior in the EU Emissions Trading System," FCN Working Papers 9/2016, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    17. Heesen, Florian & Madlener, Reinhard, 2016. "Consumer Behavior in Energy-Efficient Homes: The Limited Merits of Energy Performance Ratings as Benchmarks," FCN Working Papers 17/2016, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
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    Citations

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    Cited by:

    1. repec:eee:enepol:v:121:y:2018:i:c:p:426-440 is not listed on IDEAS
    2. Schmitz, Hendrik & Madlener, Reinhard, 2017. "Direct and Indirect Energy Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach," FCN Working Papers 10/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    3. Frieling, Julius & Madlener, Reinhard, 2017. "Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today," FCN Working Papers 2/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    4. Heesen, Florian & Madlener, Reinhard, 2018. "Revisiting Heat Energy Consumption Modeling: Household Production Theory Applied to Field Experimental Data," FCN Working Papers 4/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    5. Frieling, Julius & Madlener, Reinhard, 2017. "The Turning Tide: How Energy has Driven the Transformation of the British Economy Since the Industrial Revolution," FCN Working Papers 7/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    6. Specht, Jan Martin & Madlener, Reinhard, 2018. "Business Models for Energy Suppliers Aggregating Flexible Distributed Assets and Policy Issues Raised," FCN Working Papers 7/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    7. Pereira, Guillermo Ivan & Specht, Jan Martin & Silva, Patrícia Pereira & Madlener, Reinhard, 2018. "Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making," Energy Policy, Elsevier, vol. 121(C), pages 426-440.
    8. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Center of Applied Economic Research Münster (CAWM).

    More about this item

    Keywords

    aggregate production; technical change; multi-factor production; energy demand;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • 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
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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