Fuel for Economic Growth?

Johan Gars () and Conny Olovsson
Additional contact information
Johan Gars: GEDB, Royal Swedish Academy of Sciences, Postal: 104 05 Stockholm, Sweden

No 299, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: We set up an endogenous growth model in which the efficiency of both capital and fossil energy can be improved, whereas the efficiency of one alternative energy source is limited. With capital and energy as complements, there exist two steady states: one stagnant where energy is fully derived from the alternative energy source, and one with balanced growth where energy is fully sourced from fossil fuel. Heterogeneity in initial TFP levels can generate the Great Divergence. The demand for fossil fuel in technologically advanced countries drives up its price and makes fossil fuel too costly in less advanced countries that choose the alternative and stagnant energy input.

Keywords: Growth; Malthusian stagnation; Industrial Revolution; Great Divergence; Technological progress (search for similar items in EconPapers)
JEL-codes: O11 O14 O33 O41 O50 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-05-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.riksbank.se/Documents/Rapporter/Working ... rap_wp299_150602.pdf (application/pdf)

Related works:
Journal Article: Fuel for economic growth? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:rbnkwp:0299

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