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A Theory of Energy Use

Author

Listed:
  • Luis Puch

    (Univ. Complutense)

  • Antonia Díaz

    (University Carlos III)

Abstract

The evidence shows that the short run elasticity of energy use is smaller than its long run elasticity. The recent evidence on energy use and energy prices suggests, though, that the short run response of energy use to energy prices has changed over time. Existing theories of energy use, namely, complementarity between capital and energy at the aggregate level, or putty-clay models of energy use, cannot account for this change in the short run elasticity of energy use. Here we propose a theory where, as in the data, the short run elasticity of energy use is smaller than the long run elasticity but it also may change depending on the rate of embodied technological progress, accounting for its increase in the recent years.

Suggested Citation

  • Luis Puch & Antonia Díaz, 2012. "A Theory of Energy Use," 2012 Meeting Papers 802, Society for Economic Dynamics.
    • Handle: RePEc:red:sed012:802
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    References listed on IDEAS

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