Energy Intensity and Long- and Short-Term Efficiency in US Manufacturing Industry

Oleg Badunenko and Subal Kumbhakar

Energies, 2020, vol. 13, issue 15, 1-21

Abstract: We analyze energy use efficiency of manufacturing industries in US manufacturing over five decades from 1960 to 2011. We apply a 4-component stochastic frontier model, which allows disentangling efficiency into a short- and long-term efficiency as well as accounting for industry heterogeneity. The data come from NBER-CES Manufacturing Industry Database. We find that relative to decade-specific frontiers, the overall efficiency of manufacturing industries, which is a product of transient and persistent efficiencies has deteriorated greatly in the 1970s and rebounded only in the 2000s. The industries are very efficient in the short-term and this has not changed over five decades. The high level of overall inefficiency is almost completely due to the structural inefficiency which can be explained by what is referred to as the “energy paradox”. Finally, higher energy-intensive industries perform worse in terms of energy use efficiency than their low energy-intensity counterparts.

Keywords: energy efficiency; energy intensity; stochastic frontier; persistent efficiency; transient efficiency; US manufacturing; energy paradox (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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