Fossil fuels, alternative energy and economic growth

Raul Barreto

Economic Modelling, 2018, vol. 75, issue C, 196-220

Abstract: We present a theoretical framework that incorporates energy within an endogenous growth model. The model explicitly allows for the interaction and substitution between fossil fuels, defined as a non-renewable resource derived from some fixed initial stock, and alternative energy, defined as renewable resource whose production requires capital input. The dynamics of the model depict a unique balance growth to a steady state. The saddle path of consumption temporarily peaks, when fossil fuels are plentiful and cheap, followed by a fall, as fossil fuel become more scarce and alternative energy production has yet to take over, until finally the steady state is reached where alternative energy production fuels the entire economy.

Keywords: Endogenous growth; Non-renewable resources; Renewable resources; Energy; Oil; Fossil fuels; Alternative energy (search for similar items in EconPapers)
JEL-codes: O41 Q21 Q31 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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Related works:
Working Paper: Fossil fuels, alternative energy and economic growth (2015)
Working Paper: Fossil Fuels, Alternative Energy and Economic Growth (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:75:y:2018:i:c:p:196-220

DOI: 10.1016/j.econmod.2018.06.019

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