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Costly capital reallocation and energy use


Díaz, Antonia and Puch, Luis A. and Guilló, María D. (2001) Costly capital reallocation and energy use. [ Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE); nº 11, 2001, ]


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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.

Resumen (otros idiomas)

Se propone un modelo para demostrar que los datos de series temporales muestran que el uso de la energía responde poco a cambios en su precio, pero que, sin embargo, los datos de sección cruzada entre países muestran que el uso de la energía responde a las diferencias internacionales en su precio.

Item Type:Working Paper or Technical Report
Uncontrolled Keywords:Uso de la Energía, Precio, Energy price, Energy use, Costly capital reallocation, Number of plants
Subjects:Social sciences > Economics > Industrial organization
JEL:E22, E23, Q43
Series Name:Documentos de trabajo del Instituto Complutense de Análisis Económico (ICAE)
ID Code:6795

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Deposited On:30 Nov 2007
Last Modified:29 Apr 2016 12:17

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