Energy Substitutability in Canadian Manufacturing Econometric Estimation with Bootstrap Confidence Intervals

Yazid Dissou and Reza Ghazal

The Energy Journal, 2010, vol. 31, issue 1, 121-148

Abstract: This study provides estimates of the price and Morishima substitution elasticities between energy and non-energy inputs in two Canadian energyintensive manufacturing industries: Primary Metal and Cement. The elasticities are estimated using annual industry-level KLEM data (1961-2003) and relying on two flexible functional forms: the Translog and the Symmetric Generalized McFadden (SGM) cost functions. In addition to the point estimates, the confidence intervals of the elasticities are computed using Studentized bootstrap resampling techniques. For both industries, the estimation results suggest that capital, labour, material and energy are pairwise substitutes and that energy is the most substitutable input. However, the low magnitudes of the estimated elasticities do not seem to offer great flexibility to these industries to adapt to high increases in energy prices.

Keywords: Energy; Elasticity of substitution; Translog Cost Function; Symmetric Generalized McFadden (SGM) Cost Function; Double Bootstrap (search for similar items in EconPapers)
Date: 2010
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Related works:
Journal Article: Energy Substitutability in Canadian Manufacturing Econometric Estimation with Bootstrap Confidence Intervals (2010)
Working Paper: Energy Substitutability in Canadian Manufacturing: Econometric Estimation with Bootstrap Confidence Intervals (2009)
Working Paper: Energy Substitutability in Canadian Manufacturing: Econometric Estimation with Bootstrap Confidence Intervals (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:31:y:2010:i:1:p:121-148

DOI: 10.5547/ISSN0195-6574-EJ-Vol31-No1-6

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