Trends in Factor Price Elasticities Adding Energy to Capital and Labor in the US Economy Net Foreign Assets, Financial Liberalization and Real Exchange Rates

Henry Thompson

Review of Economic Analysis, 2019, vol. 11, issue 3, 399-417

Abstract: This paper estimates trends in factor price elasticities adding energy Btu input to fixed capital assets and the labor force in annual US data from 1949 to 2013. Second order effects improve estimates of the production function in log differences. The unrestricted estimates test for concavity and constant returns to scale. Adding energy input reduces the apparent productivity of labor and reveals strong capital-labor factor price elasticities with pronounced trends. Energy and labor trend to become weak complements. These trends offer insight into recent economic history and keys to predicting the future as well.

Keywords: energy input; factor productivity; factor price elasticity (search for similar items in EconPapers)
JEL-codes: E17 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ren:journl:v:11:y:2019:i:3:p:399-417

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