Energy-Saving Technology Shocks, Emissions, and the Macroeconomy

Emanuel Moench () and Soroosh Soofi-Siavash ()
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Emanuel Moench: Frankfurt School of Finance & Management, CEPR
Soroosh Soofi-Siavash: Lietuvos Bankas, Vilnius University

No 134, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: We use restrictions derived from frontier models of directed technical change to identify an energy-saving technology shock in a Bayesian structural VAR of the U.S. economy. This shock is associated with a persistent reduction of the carbon intensity of output. It also leads to a delayed but strong increase of GDP which gives rise to substantial additional fossil fuel consumption and new emissions. As a result, per capita emissions fully rebound after an initial decline. These effects can largely be attributed to a substitution of fossil fuel end-use by electricity, much of which has historically been generated using fossil fuels.

Keywords: energy-saving technology shocks; carbon emissions; structural vector autoregressions (search for similar items in EconPapers)
JEL-codes: C32 O47 Q43 Q55 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2025-06-11
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