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

  • Giuseppe Travaglini

    ()

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

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.

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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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Paper provided by University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini in its series Working Papers with number 1001.

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Length: 20 pages
Date of creation: 2010
Date of revision: 2010
Handle: RePEc:urb:wpaper:10_01
Contact details of provider: Web page: http://www.econ.uniurb.it/

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  1. GalĂ­, Jordi, 1996. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," CEPR Discussion Papers 1499, C.E.P.R. Discussion Papers.
  2. 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 655-73, September.
  3. Pizer, William A. & Popp, David, 2007. "Endogenizing Technological Change: Matching Empirical Evidence to Modeling Needs," Discussion Papers dp-07-11, Resources For the Future.
  4. Lawrence J. Christiano & Martin Eichenbaum & Robert Vigfusson, 2003. "What happens after a technology shock?," International Finance Discussion Papers 768, Board of Governors of the Federal Reserve System (U.S.).
  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. 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.
  7. 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.
  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.
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