COSTLY CAPITAL REALLOCATION AND ENERY USE

María Guilló, Antonia Díaz and Luis Puch

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In time 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 in conformity with the low short-run and high long-run elasticities of energy use seen in data.

Keywords: Energy Price; Energy Use; Costly Capital Reallocation (search for similar items in EconPapers)
Pages: 40 pages
Date: 2002-07
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Published by Ivie

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2002-14.pdf Fisrt version / Primera version, 2002 (application/pdf)

Related works:
Journal Article: Costly Capital Reallocation and Energy Use (2004)
Working Paper: Costly capital reallocation and energy use (2001)
Working Paper: Costly capital reallocation and energy use (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2002-14

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