Costly Capital Reallocation and Energy Use

Antonia Díaz, Luis Puch and María Guilló

Review of Economic Dynamics, 2004, vol. 7, issue 2, 494-518

Abstract: In times series data, energy use does not change much with energy price changes. However, energy use is responsive to international differences in energy prices in cross-section data across countries. In this paper we consider a model of energy use in which production takes place at individual plants and capital can be used either to directly produce output or to reduce the energy required to run the plant. We assume that reallocating capital from one use to another is costly. This turns out to be crucial for the quantitative properties of the model to be is conformity with the low short-run and high long-run elasticities of energy use seen in data. (Copyright: Elsevier)

Keywords: energy price; energy use; capital reallocation; number of plants. (search for similar items in EconPapers)
JEL-codes: E22 E23 Q43 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (21)

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Related works:
Working Paper: COSTLY CAPITAL REALLOCATION AND ENERY USE (2002)
Working Paper: Costly capital reallocation and energy use (2001)
Working Paper: Costly capital reallocation and energy use (2001)
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DOI: 10.1016/j.red.2003.09.005

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