RT Generic
T1 A theory of vintage capital investment and energy use
A1 Díaz, Antonia
A1 Puch, Luis A.
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB 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 InvestmentSpecific 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 averageefficiency of the economy (the capital-energy ratio), shielding the economy against the impact of the 2003-08 price shock.
SN 2340-5031
YR 2013
FD 2013-12
LK https://hdl.handle.net/10016/17830
UL https://hdl.handle.net/10016/17830
LA eng
NO Díaz, and Puch, thank respectively the Dirección General de Investigación, projects ECO2010-20614and ECO2010-17943, for financial support, and the EUI for its support during part of this research. Puch alsothanks Fundación FocusAbengoa and FEDEA.
DS e-Archivo
RD 17 jul. 2024