Directed Technical Change as a Response to Natural Resource Scarcity

John Hassler, Per Krusell and Conny Olovsson

Journal of Political Economy, 2021, vol. 129, issue 11, 3039 - 3072

Abstract: We develop a quantitative macroeconomic theory of input-saving technical change to analyze how markets economize on scarce natural resources, with an application to fossil fuel. We find that aggregate US data call for a very low short-run substitution elasticity between energy and the capital/labor inputs. Our estimates imply that energy-saving technical change took off when the oil shocks hit in the 1970s. This response implies significant substitutability with the other inputs in the long run: even under ever-rising energy prices, long-run consumption growth is still possible, along with a modest factor share of energy.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (64)

Downloads: (external link)
http://dx.doi.org/10.1086/715849 (application/pdf)
http://dx.doi.org/10.1086/715849 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Directed technical change as a response to natural-resource scarcity (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/715849

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().