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An Intertemporal Optimisation Model of Households in an E3-Model (Economy/Energy/Environment) Framework

Author

Listed:
  • Kurt Kratena
  • Michael Wüger

    (WIFO)

Abstract

This paper deals with the total CO2 impact of households in a simple dynamic E3 model (economy/energy/environment), comprising a model block of private consumption and an input-output model. The consumption model describes the demand for different durables and nondurables, derived from intertemporal optimisation and has been estimated econometrically with Austrian time series data. Energy demand of households in addition to economic variables also depends on the energy-efficiency as well as the level of energy-using durables (electrical and non-electrical appliances, vehicles, video, audio, computer goods). Higher energy-efficiency also leads to the well known "rebound effect", as the "service" of energy becomes cheaper. Investment in new and potentially more energy-efficient durables is guided by intertemporal optimisation. Policies with incentives to switch towards a more energy-efficient durable stock have an impact on energy consumption, as well as on the demand for other nondurables and – due to the investment – on durables and therefore cause multiple effects on energy demand and emissions. Indirect energy demand and CO2 emissions of production for households is also taken into account. An exemplary simulation of a scrappage policy scheme for private cars reveals that – though the direct "rebound effect" lies within the range found in the literature – the direct and indirect feedback mechanisms on energy demand of the total economy might be completely different.

Suggested Citation

  • Kurt Kratena & Michael Wüger, 2010. "An Intertemporal Optimisation Model of Households in an E3-Model (Economy/Energy/Environment) Framework," WIFO Working Papers 382, WIFO.
  • Handle: RePEc:wfo:wpaper:y:2010:i:382
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    File URL: http://www.wifo.ac.at/wwa/pubid/40716
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    References listed on IDEAS

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    Cited by:

    1. Kurt Kratena & Gerhard Streicher & Simone Salotti & Mark Sommer & Juan Manuel Valderas Jaramillo, 2017. "FIDELIO 2: Overview and theoretical foundations of the second version of the Fully Interregional Dynamic Econometric Long-term Input-Output model for the EU-27," JRC Working Papers JRC105900, Joint Research Centre (Seville site).
    2. N. N., 2014. "WIFO-Monatsberichte, issue 6/2014," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(6), June.
    3. N. N., 2015. "WIFO-Monatsberichte, issue 7/2015," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(7), July.
    4. Kurt Kratena & Ina Meyer & Mark Sommer, 2014. "Long-term Energy Use in Austria. The Impacts of Carbon and Energy Prices up to 2030," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(6), pages 427-441, June.
    5. Claudia Kettner & Angela Köppl & Sigrid Stagl, 2014. "Towards an operational measurement of socio-ecological performance," WWWforEurope Working Papers series 52, WWWforEurope.
    6. Daniela Kletzan-Slamanig & Claudia Kettner & Angela Köppl & Ina Meyer & Franz Sinabell, 2015. "Key Indicators of Climate Change and the Energy Sector in 2015. Special Topic: Using Energy Efficiency to Boost Decarbonisation," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(7), pages 593-607, July.

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    Keywords

    energy demand and environmental impact; durable goods; intertemporal optimisation with liquidity constraints; input-output modelling;

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