IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Energy, Money and Pollution

Listed author(s):
  • Antonio Roma


Registered author(s):

    This paper explores general equilibrium consumption choices and interest rate de- termination in a two-period model in which the production side explicitely describes the thermodynamic process unavoidably connected with production, as argued by Georgescu Roegen. A simple energy based production process is modeled, which is not in a stationary state. The resulting production function is time dependent. In neoclassical general equilibrium the thermodynamic implication of the production process, i.e. the production of waste, will not be taken into account by decision making agents. For welfare optimality, the resulting externality need be corrected by a social planner,or through the use of environmental related taxation. However, it is shown that imposing in the same economy energy as a medium of exchange (money), makes agents "energy conscious" and decreases the externality associated with entropic waste production through a market mechanism, without the need for the intervention. In the limit case in which production occurs in thermodynamic equilibrium, no entropic waste is produced, and the model collapses to the nested neoclassical model. A contribution of the proposed approach is the determination of energy (money) prices in general equilibrium. Despite the fact that energy does not enter the agents utility function, and therefore has no direct value, money prices and interest rate can be fully characterized in the model due precisely to the pro- duction technology adopted. The change in the numeraire and medium of exchange performed a ects the economy due to the non stationarity of the production process, but has no e ect in the limit case in which the productive process reaches steady state.

    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:
    Download Restriction: no

    Paper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 410.

    in new window

    Date of creation: Dec 2003
    Handle: RePEc:usi:wpaper:410
    Contact details of provider: Postal:
    Piazza S.Francesco,7 - 53100 Siena

    Phone: (39)(0577)232620
    Fax: (39)(0577)232661
    Web page:

    More information through EDIRC

    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:usi:wpaper:410. 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: (Fabrizio Becatti)

    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.