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The added value from a general equilibrium analyses of increased efficiency in household energy use

Author

Listed:
  • Patrizio Lecca

    (Department of Economics, University of Strathclyde)

  • Peter McGregor

    (Department of Economics, University of Strathclyde)

  • J. Kim Swales

    (Department of Economics, University of Strathclyde)

  • Karen Turner

    (Department of Accounting, Economics and Finance, School of Management and Languages, Heriot-Watt University)

Abstract

The aim of the paper is to identify the added value from using general equilibrium techniques to consider the economy-wide impacts of increased efficiency in household energy use. We take as an illustrative case study the effect of a 5% improvement in household energy efficiency on the UK economy. This impact is measured through simulations that use models that have increasing degrees of endogeneity but are calibrated on a common data set. That is to say, we calculate rebound effects for models that progress from the most basic partial equilibrium approach to a fully specified general equilibrium treatment. The size of the rebound effect on total energy use depends upon: the elasticity of substitution of energy in household consumption; the energy intensity of the different elements of household consumption demand; and the impact of changes in income, economic activity and relative prices. A general equilibrium model is required to capture these final three impacts.

Suggested Citation

  • Patrizio Lecca & Peter McGregor & J. Kim Swales & Karen Turner, 2013. "The added value from a general equilibrium analyses of increased efficiency in household energy use," Working Papers 1308, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1308
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Energy efficiency; indirect rebound effects; economy-wide rebound effects; household energy consumption; CGE models;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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