A theory of vintage capital investment and energy use

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dc.contributor.author Díaz, Antonia
dc.contributor.author Puch, Luis A.
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía
dc.date.accessioned 2014-04-22T15:55:45Z
dc.date.available 2014-04-22T15:55:45Z
dc.date.issued 2013-12
dc.identifier.issn 2340-5031
dc.identifier.uri http://hdl.handle.net/10016/17830
dc.description.abstract In this paper we propose a theory of investment and energy use to study the response of macroeconomic aggregates to energy price shocks. In our theory this response depends on the interaction between the energy efficiency built in capital goods (which is irreversible throughout their lifetime) and the growth rate of Investment Specific Technological Change (ISTC hereafter). We show that ISTC is a sort of energysaving technical change and, therefore, a substitute of energy efficiency: it rises the productivity of capital without rising energy use, which increases effective energy efficiency (i.e., the amount of energy use required per unit of quality-adjusted capital). Hence, our theory can account for the fall of energy use per unit of output observed during the 1990s, a period in which energy prices fell below trend. By increasing investment in the years of high ISTC growth, the economy was increasing the average efficiency of the economy (the capital-energy ratio), shielding the economy against the impact of the 2003-08 price shock.
dc.description.sponsorship Díaz, and Puch, thank respectively the Dirección General de Investigación, projects ECO2010-20614 and ECO2010-17943, for financial support, and the EUI for its support during part of this research. Puch also thanks Fundación FocusAbengoa and FEDEA.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Working Papers. Economics. WE
dc.relation.ispartofseries 13-20
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.other Energy use
dc.subject.other Vintage capital
dc.subject.other Energy price shocks
dc.subject.other Investment-specific technology shocks
dc.title A theory of vintage capital investment and energy use
dc.type workingPaper
dc.subject.jel E22
dc.subject.jel E23
dc.subject.eciencia Economía
dc.rights.accessRights openAccess
dc.date.modified 2014-04
dc.relation.projectID Gobierno de España. ECO2010-20614
dc.relation.projectID Gobierno de España. ECO2010-17943
dc.type.version submitedVersion
dc.identifier.repec we1320
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