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Energy-Saving Technical Change

John Hassler (), Per Krusell () and Conny Olovsson

No 1529, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: We estimate an aggregate production function with constant elasticity of substitution between energy and a capital/labor composite using U.S. data. The implied measure of energy-saving technical change appears to respond strongly to the oil-price shocks in the 1970s and has a negative medium-run correlation with capital/labor-saving technical change. Our findings are suggestive of a model of directed technical change, with low short-run substitutability between energy and capital/labor but significant substitutability over longer periods through technical change. We construct such a model, calibrate it based on the historical data, and use it to discuss possibilities for the future.

Pages: 41 pages
Date: 2015-11
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Working Paper: Energy-saving technical change (2015) Downloads
Working Paper: Energy-Saving Technical Change (2012) Downloads
Working Paper: Energy-Saving Technical Change (2012) Downloads
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