Costly capital reallocation and energy use

Antonia Díaz, Luis Puch and María Guilló

Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

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 planto 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-mn and high long-run elasticities of energy use seen in data. Furthermore, our model displays variations in capacity utilization that are in line with those observed during the period of major oil price increases.

Keywords: Energy price; Energy use; Costly capital reallocation; Number of plants. (search for similar items in EconPapers)
JEL-codes: E22 E23 Q43 (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-com and nep-dge
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https://eprints.ucm.es/id/eprint/6795/1/0111.pdf (application/pdf)

Related works:
Journal Article: Costly Capital Reallocation and Energy Use (2004)
Working Paper: COSTLY CAPITAL REALLOCATION AND ENERY USE (2002)
Working Paper: Costly capital reallocation and energy use (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ucm:doicae:0111

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