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The dynamic effects of technological and non technological shocks in the energy sector: a case study for Italy

Author

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  • Giuseppe Travaglini

    () (Dipartimento di Economia e Metodi Quantitativi, UniversitĂ  di Urbino (Italy))

Abstract

In this paper we address the question whether fiscal incentives and regulation are the most appropriate tools to increase productivity in energy sector. Doubts exist about whether these are the most effective tools for improving productivity since changes in productivity are usually related to changes in technological progress. We use a vector autoregressive model to study this problem. Our purpose is to identify the shocks which induce movements in productivity, and to measure the productivity response to each shock separately. We use economic theory about long run impacts of different shocks to identify the empirical model. The key indentifying restriction is that the level of productivity is determined in the long run by shocks to technology. We find that productivity responds positively to technological shocks, leading to a transition from one equilibrium to another. Yet, non technological shocks play a minor and transitory role in explaining productivity growth. All these evidences cast doubt on the effectiveness of the current European community policy for development and innovation in energy sector based mainly on fiscal incentives and regulations.

Suggested Citation

  • Giuseppe Travaglini, 2010. "The dynamic effects of technological and non technological shocks in the energy sector: a case study for Italy," Working Papers 1001, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2010.
  • Handle: RePEc:urb:wpaper:10_01
    as

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    File URL: http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_10_01.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    2. Jordi Gali, 1999. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," American Economic Review, American Economic Association, vol. 89(1), pages 249-271, March.
    3. Enrico Saltari & Giuseppe Travaglini, 2009. "The Productivity Slowdown Puzzle. Technological and Non-technological Shocks in the Labor Market," International Economic Journal, Taylor & Francis Journals, vol. 23(4), pages 483-509.
    4. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What Happens After a Technology Shock?," NBER Working Papers 9819, National Bureau of Economic Research, Inc.
    5. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2005. "Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 1-45, February.
    6. Pizer, William A. & Popp, David, 2008. "Endogenizing technological change: Matching empirical evidence to modeling needs," Energy Economics, Elsevier, vol. 30(6), pages 2754-2770, November.
    7. Carraro, Carlo & Gerlagh, Reyer & Zwaan, Bob van der, 2003. "Endogenous technical change in environmental macroeconomics," Resource and Energy Economics, Elsevier, vol. 25(1), pages 1-10, February.
    8. Chirinko, Robert S., 1995. "Nonconvexities, labor hoarding, technology shocks, and procyclical productivity a structural econometric analysis," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 61-98.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Energy Sector; SVAR; Productivity; Shocks.;

    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
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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