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Modeling international trends in energy efficiency

David Stern ()

Energy Economics, 2012, vol. 34, issue 6, 2200-2208

Abstract: I use a stochastic production frontier to model energy efficiency trends in 85 countries over a 37-year period. Differences in energy efficiency across countries are modeled as a stochastic function of explanatory variables and I estimate the model using the cross-section of time-averaged data, so that no structure is imposed on technological change over time. Energy efficiency is measured using a new energy distance function approach. The country using the least energy per unit output, given its mix of outputs and inputs, defines the global production frontier. A country's relative energy efficiency is given by its distance from the frontier—the ratio of its actual energy use to the minimum required energy use, ceteris paribus. Energy efficiency is higher in countries with, inter alia, higher total factor productivity, undervalued currencies, and smaller fossil fuel reserves and it converges over time across countries. Globally, technological change was the most important factor counteracting the energy-use and carbon-emissions increasing effects of economic growth.

Keywords: Energy; Efficiency; Carbon emissions; Technological change; Between estimator; Stochastic frontier (search for similar items in EconPapers)
JEL-codes: O13 O33 O47 Q43 Q54 Q55 Q56 (search for similar items in EconPapers)
Date: 2012
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