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Boqiang Lin - One of the best experts on this subject based on the ideXlab platform.
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is Factor Substitution an effective way to save energy and reduce emissions evidence from china s metallurgical industry
Journal of Cleaner Production, 2021Co-Authors: Boqiang LinAbstract:Abstract According to classical economics, the Substitution of production Factors could be used to reduce a specific input Factor, but it is restricted by the irreplaceability of Factors. As an essential production Factor of production, can energy be substituted by other Factors such as capital or labor? How significant is the Substitution effect between Factors or energy varieties? This paper attempts to study a paradigm to analyze the effectiveness of element Substitution for energy saving. This paper explores the Substitution relationship between inter-Factor and inter-fuel from 1985 to 2017, which is based on the trans-log cost function. At the same time, the contribution of budget effect, Substitution effect, output effect are analyzed in this paper as well as technological progress to the reduction of carbon emission intensity. As being found, the marketization of energy prices is underdeveloped, which hinders the Substitution effect of energy in the metallurgical industry. The own-price elasticities of labor, energy, and capital are −0.3261, −0.1569, and −0.0706, respectively. The Substitution of energy by capital is a more effective and sustainable alternative. Besides, a carbon tax can save 22.25 million TCE of energy consumption and reduce 62.67 million tons of carbon emissions in the whole industry.
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the influence of carbon tax on the ecological efficiency of china s energy intensive industries a inter fuel and inter Factor Substitution perspective
Journal of Environmental Management, 2020Co-Authors: Ruipeng Tan, Boqiang LinAbstract:Abstract China's energy intensive industries have posed great challenges in achieving carbon emissions reduction goals. We calculate the influence of carbon tax levying on the CO2 emissions as well as ecological efficiency of China's energy intensive industries utilizing inter-fuel and inter-Factor Substitution channel. To allow for the slow adjustment process of the enterprises of different fuels and Factors inputs, a dynamic model and three-stage estimation procedure are used. Based on the Substitution among fuels and Factors, the results indicate that carbon tax levying will make the enterprises transform from consuming coal (with a higher carbon efficient) to lower oil/gas and electricity, and from inputting energy to inputting more labor and capital. Therefore, carbon tax is conductive for the CO2 reduction in China's energy intensive industries. With regard to the two kinds of ecological efficiency, carbon tax plays a negative role in improving them. Thus, carbon tax levy is suggested to reduce the carbon dioxide emissions in China's energy intensive industries. The future assessment tasks should include the ecological efficiency in to make the assessment more reasonable.
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exploring the green total Factor productivity of china s metallurgical industry under carbon tax a perspective on Factor Substitution
Journal of Cleaner Production, 2019Co-Authors: Boqiang LinAbstract:Abstract The characteristics of high emissions and high energy consumption in metallurgical industry have brought great challenges to the green and low carbon transition in China. As a low-carbon economic instrument, carbon tax is generally considered to be an effective way to reduce CO2 emissions through raising energy cost, but whether it will promote the green total Factor productivity (GTFP) of China's metallurgical industry is still unanswered. Under this background, this paper uses provincial panel data over years 2000–2015 to investigate the impact of carbon taxation on GTFP of metallurgical industry from the perspective of inter-fuel and inter-Factor Substitution. The lock-in mechanism is also incorporated in the three-stage estimation model to better reflect the asymmetric price response of Factors and fuels. The results reveal that the slow marketization process of energy price and the rigid demand for energy in China's metallurgical industry hinder the Substitution effect of energy. The implementation of carbon tax has limited effect on energy-saving and CO2 reduction in the metallurgical industry of China and levying a carbon tax has a negative effect on GTFP during the research period. Therefore, the government should not achieve CO2 reduction targets at the expense of green economic growth. GTFP is suggested to be considered in future assessment criteria in the process of transforming to low-carbon economy.
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good subsidies or bad subsidies evidence from low carbon transition in china s metallurgical industry
Energy Economics, 2019Co-Authors: Boqiang LinAbstract:Abstract Since the metallurgical industry has become the main source of China's carbon dioxide emissions and energy consumption in recent years, low-carbon transition in that industry is of great significance for achieving China's carbon reduction targets. It is generally believed that phasing out fossil fuel subsidies is an effective way to reduce energy-related CO2 emissions since it can increase the energy prices and lower its consumption. This paper aims to investigate whether the energy subsidy removal can promote the low-carbon transition of China's metallurgical industry. Taking inter-fuel and inter-Factor Substitution effects as the link, we calculate the CO2 mitigation potential on the assumption that the subsidies for each category of fossil energy were eliminated. We find that the metallurgical industry has a sluggish reaction to the changes in energy price. Supposing eliminating the energy subsidies in the period of 2003–2015, the amount of reduced CO2 would be 487.286 million tons, accounting for a slight proportion of the total emissions in the industry. But it is meaningful for the global CO2 mitigation since it approximates the whole CO2 emissions in Norway during the same period. These findings can provide some new insights for the energy subsidy issue and suggest that the additional measures are required to promote the low-carbon transition in China's metallurgical industry rather than just relying on the removal of fossil fuel subsidies.
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estimation of energy Substitution effect in china s machinery industry based on the corrected formula for elasticity of Substitution
Energy, 2017Co-Authors: Boqiang Lin, Weisheng LiuAbstract:Abstract Characterized with high-energy consumption, China's machinery industry has seen a surge in its energy consumption reaching 540.743 Mtce (million tons of coal equivalent) in 2014, which is about 12.7% of China's total energy consumption. We try to examine inter-Factor Substitution towards energy conservation in the Chinese machinery industry by applying the corrected formula. Documented results evidence a significant Substitution relation between energy and capital as well as labor. The estimated Substitution elasticity between capital and energy is about 1.029 while that of labor and energy stands at 1.030. This is a clear indication that, allocating more capital or labor to China's machinery industry instead of energy will be vital in the CO 2 mitigation effort. Also, a practical scenario estimation to access energy conservation and CO 2 abatement indicates that, a 5% and 10% increase in capital inputs will reduce energy consumption by 27.742 and 55.483 Mtce while CO 2 emissions will reduce by 64.553 and 129.105 Mt respectively in 2014.
Alpo Willman - One of the best experts on this subject based on the ideXlab platform.
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the role of Factor Substitution and technical progress in china s great expansion
Social Science Research Network, 2018Co-Authors: Anasimona Manu, Peter Mcadam, Alpo WillmanAbstract:We offer a macroeconomic assessment of China’s Reform Period, highlighting several neglected channels underlining its great expansion. Estimating the supply side of the post-Reform economy reveals the relatively high (above unity) value of the elasticity of Factor Substitution and the time-varying pattern of Factor-saving technical change. The latter we relate to trade, human capital and reallocation Factors. We then demonstrate how, in addition to Factor accumulation and technical progress, the above-unity elasticity of Substitution can be a source of growth (the ‘de La Grandville hypothesis’). We then draw upon our estimated framework to rationalize China’s high and rising savings ratio as well as the dynamic nature of its convergence path.
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the role of Factor Substitution and technical progress in china s great expansion
Research Papers in Economics, 2018Co-Authors: Anasimona Manu, Peter Mcadam, Alpo WillmanAbstract:We offer a macroeconomic assessment of China’s Reform Period, highlighting several neglected channels underlining its great expansion. Estimating the supply side of the post-Reform economy reveals the relatively high (above unity) value of the elasticity of Factor Substitution and the time-varying pattern of Factor-saving technical change. The latter we relate to trade, human capital and reallocation Factors. We then demonstrate how, in addition to Factor accumulation and technical progress, the above-unity elasticity of Substitution can be a source of growth (the ‘de La Grandville hypothesis’). We then draw upon our estimated framework to rationalize China’s high and rising savings ratio as well as the dynamic nature of its convergence path. JEL Classification: D24, E13, O11
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the normalized ces production function theory and empirics
Journal of Economic Surveys, 2012Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract The elasticity of Substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of production functions with specifically non-unitary Substitution elasticities (i.e., non-Cobb–Douglas) was hampered by empirical and theoretical uncertainties. As recently revealed, ‘normalization’ of production-technology systems holds out the promise of resolving many of those uncertainties. We survey and assess the intrinsic links between production (as conceptualized in a production function), Factor Substitution (as made most explicit in Constant Elasticity of Substitution functions) and normalization (defined by the fixing of baseline values for relevant variables). First, we recall how the normalized Constant Elasticity of Substitution function came into existence and what normalization implies for its formal properties. Then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth. Next, we discuss the benefits normalization brings for empirical estimation and empirical growth research. Finally, we identify promising areas of future research.
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Factor Substitution and Factor augmenting technical progress in the united states a normalized supply side system approach
The Review of Economics and Statistics, 2007Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract Using a normalized CES function with Factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that...
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Factor Substitution and Factor augmenting technical progress in the us a normalized supply side system approach
Social Science Research Network, 2004Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Using a normalized CES function with Factor-augmenting technical progress, we estimate a supply-side system of the US economy from 1953 to 1998. Avoiding potential estimation biases that have occurred in earlier studies and putting a high emphasis on the consistency of the data set, required by the estimated system, we obtain robust results not only for the aggregate elasticity of Substitution but also for the parameters of labor and capital augmenting technical change. We find that the elasticity of Substitution is significantly below unity and that the growth rates of technical progress show an asymmetrical pattern where the growth of laboraugmenting technical progress is exponential, while that of capital is hyperbolic or logarithmic.
Rainer Klump - One of the best experts on this subject based on the ideXlab platform.
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the normalized ces production function theory and empirics
Journal of Economic Surveys, 2012Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract The elasticity of Substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of production functions with specifically non-unitary Substitution elasticities (i.e., non-Cobb–Douglas) was hampered by empirical and theoretical uncertainties. As recently revealed, ‘normalization’ of production-technology systems holds out the promise of resolving many of those uncertainties. We survey and assess the intrinsic links between production (as conceptualized in a production function), Factor Substitution (as made most explicit in Constant Elasticity of Substitution functions) and normalization (defined by the fixing of baseline values for relevant variables). First, we recall how the normalized Constant Elasticity of Substitution function came into existence and what normalization implies for its formal properties. Then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth. Next, we discuss the benefits normalization brings for empirical estimation and empirical growth research. Finally, we identify promising areas of future research.
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Factor Substitution income distribution and growth in a generalized neoclassical model
German Economic Review, 2009Co-Authors: Andreas Irmen, Rainer KlumpAbstract:We analyze a generalized neoclassical growth model that combines a normalized CES production function and possible asymmetries of savings out of Factor incomes. This generalized model helps to shed new light on a recent debate concerning the impact of Factor Substitution and income distribution on economic growth. We can show that this impact relies on both an efficiency and an acceleration effect, where the latter is caused by the distributional consequences of an increase in the elasticity of Substitution. While the efficiency effect is always positive, the direction of the acceleration effect depends on the particular savings hypothesis. However, if savings out of capital income are substantial so that a certain threshold value is surpassed we find that the efficiency effect dominates and higher Factor Substitution can work as a major engine of growth.
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Factor Substitution income distribution and growth in a generalized neoclassical model
German Economic Review, 2009Co-Authors: Andreas Irmen, Rainer KlumpAbstract:Abstract. We analyze a generalized neoclassical growth model that combines a normalized CES production function and possible asymmetries of savings out of Factor incomes. This generalized model helps to shed new light on a recent debate concerning the impact of Factor Substitution and income distribution on economic growth. We show that this impact relies on both an efficiency and a distribution effect, where the latter is caused by the distributional consequences of an increase in the elasticity of Substitution. While the efficiency effect is always positive, the sign of the distribution effect depends on the particular savings hypothesis. If the savings rate out of capital income is substantial so that a certain threshold value is surpassed, the efficiency effect dominates and higher Factor Substitution accelerates the accumulation of capital and works as a major engine of growth.
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Factor Substitution and Factor augmenting technical progress in the united states a normalized supply side system approach
The Review of Economics and Statistics, 2007Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract Using a normalized CES function with Factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that...
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Factor Substitution, Average Firm Size and Economic Growth
Small Business Economics, 2006Co-Authors: Matteo Aquilina, Rainer Klump, Carlo PietrobelliAbstract:This paper extends the Lucas (1978, The Bell Journal of Economics 9 (2), 508–523) analysis of firm size by taking into account a normalised aggregate CES production function. In a general equilibrium framework it is proved that there is an inverse relation between the elasticity of Substitution and average firm size. If interpreted together with the fact that richer countries are characterised by a higher elasticity of Substitution, this result can explain why the recent literature finds a positive association between the importance of SMEs in an economy and its stage of development, but seems to fail in finding causality between the two. Both have a common origin: a high value of the elasticity of Substitution. This paper also provides a first empirical test of the theory proposed using cross-country data from both developed and developing countries.
Peter Mcadam - One of the best experts on this subject based on the ideXlab platform.
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the role of Factor Substitution and technical progress in china s great expansion
Social Science Research Network, 2018Co-Authors: Anasimona Manu, Peter Mcadam, Alpo WillmanAbstract:We offer a macroeconomic assessment of China’s Reform Period, highlighting several neglected channels underlining its great expansion. Estimating the supply side of the post-Reform economy reveals the relatively high (above unity) value of the elasticity of Factor Substitution and the time-varying pattern of Factor-saving technical change. The latter we relate to trade, human capital and reallocation Factors. We then demonstrate how, in addition to Factor accumulation and technical progress, the above-unity elasticity of Substitution can be a source of growth (the ‘de La Grandville hypothesis’). We then draw upon our estimated framework to rationalize China’s high and rising savings ratio as well as the dynamic nature of its convergence path.
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the role of Factor Substitution and technical progress in china s great expansion
Research Papers in Economics, 2018Co-Authors: Anasimona Manu, Peter Mcadam, Alpo WillmanAbstract:We offer a macroeconomic assessment of China’s Reform Period, highlighting several neglected channels underlining its great expansion. Estimating the supply side of the post-Reform economy reveals the relatively high (above unity) value of the elasticity of Factor Substitution and the time-varying pattern of Factor-saving technical change. The latter we relate to trade, human capital and reallocation Factors. We then demonstrate how, in addition to Factor accumulation and technical progress, the above-unity elasticity of Substitution can be a source of growth (the ‘de La Grandville hypothesis’). We then draw upon our estimated framework to rationalize China’s high and rising savings ratio as well as the dynamic nature of its convergence path. JEL Classification: D24, E13, O11
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the normalized ces production function theory and empirics
Journal of Economic Surveys, 2012Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract The elasticity of Substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of production functions with specifically non-unitary Substitution elasticities (i.e., non-Cobb–Douglas) was hampered by empirical and theoretical uncertainties. As recently revealed, ‘normalization’ of production-technology systems holds out the promise of resolving many of those uncertainties. We survey and assess the intrinsic links between production (as conceptualized in a production function), Factor Substitution (as made most explicit in Constant Elasticity of Substitution functions) and normalization (defined by the fixing of baseline values for relevant variables). First, we recall how the normalized Constant Elasticity of Substitution function came into existence and what normalization implies for its formal properties. Then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth. Next, we discuss the benefits normalization brings for empirical estimation and empirical growth research. Finally, we identify promising areas of future research.
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Factor Substitution and Factor augmenting technical progress in the united states a normalized supply side system approach
The Review of Economics and Statistics, 2007Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Abstract Using a normalized CES function with Factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that...
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Factor Substitution and Factor augmenting technical progress in the us a normalized supply side system approach
Social Science Research Network, 2004Co-Authors: Rainer Klump, Peter Mcadam, Alpo WillmanAbstract:Using a normalized CES function with Factor-augmenting technical progress, we estimate a supply-side system of the US economy from 1953 to 1998. Avoiding potential estimation biases that have occurred in earlier studies and putting a high emphasis on the consistency of the data set, required by the estimated system, we obtain robust results not only for the aggregate elasticity of Substitution but also for the parameters of labor and capital augmenting technical change. We find that the elasticity of Substitution is significantly below unity and that the growth rates of technical progress show an asymmetrical pattern where the growth of laboraugmenting technical progress is exponential, while that of capital is hyperbolic or logarithmic.
Morakinyo O. Adetutu - One of the best experts on this subject based on the ideXlab platform.
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Energy efficiency and capital-energy substitutability: Evidence from four OPEC countries
2020Co-Authors: Morakinyo O. AdetutuAbstract:h i g h l i g h t s The analysis examines energy efficiency gains in selected OPEC countries during 1972-2010. Capital-energy substitutability is also explored to analyze the impact of policy measures to reduce energy use. The magnitudes of energy efficiency gains are somewhat small or modest. Energy and capital are substitutes in some countries, but complements in others. Climate change policies need to internalize the environmental cost of energy consumption in end-use prices. a r t i c l e i n f o t r a c t Rapid economic growth and development in several oil-exporting developing countries have led to increasing energy consumption and the accompanying greenhouse gas (GHG) emissions. Consequently, a good understanding of the nature and structure of energy use in developing economies is required for future energy and climate change policies. To this end, a modified translog cost function is employed in this paper to estimate energy efficiency for selected members of the Organization of the Petroleum Exporting Countries (OPEC) over the period 1972-2010. This also allows for the estimation of energy-capital substitutability, which arguably reflects the likely ease/disruption to long-term growth arising from policy measures aimed at reducing energy consumption and GHG emissions. The estimated results show that energy efficiency gains range from À14% to 13% for sampled countries. Furthermore, Factor Substitution elasticities suggest that energy and capital are substitutes in Algeria and Saudi Arabia, but are found to be complements in Iran and Venezuela. The insight generated by this study is that, over the last four decades, energy efficiency improvements in selected OPEC countries are modest, possibly reflecting a ''subsidy effect'' arising from artificially low energy prices. Thus, policy makers should take note that measures aimed at conserving energy need to internalize the environmental cost arising from energy consumption using pricing and fiscal instruments such as carbon taxes
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Energy efficiency and capital-energy substitutability: Evidence from four OPEC countries
Applied Energy, 2014Co-Authors: Morakinyo O. AdetutuAbstract:Abstract Rapid economic growth and development in several oil-exporting developing countries have led to increasing energy consumption and the accompanying greenhouse gas (GHG) emissions. Consequently, a good understanding of the nature and structure of energy use in developing economies is required for future energy and climate change policies. To this end, a modified translog cost function is employed in this paper to estimate energy efficiency for selected members of the Organization of the Petroleum Exporting Countries (OPEC) over the period 1972–2010. This also allows for the estimation of energy-capital substitutability, which arguably reflects the likely ease/disruption to long-term growth arising from policy measures aimed at reducing energy consumption and GHG emissions. The estimated results show that energy efficiency gains range from −14% to 13% for sampled countries. Furthermore, Factor Substitution elasticities suggest that energy and capital are substitutes in Algeria and Saudi Arabia, but are found to be complements in Iran and Venezuela. The insight generated by this study is that, over the last four decades, energy efficiency improvements in selected OPEC countries are modest, possibly reflecting a “subsidy effect” arising from artificially low energy prices. Thus, policy makers should take note that measures aimed at conserving energy need to internalize the environmental cost arising from energy consumption using pricing and fiscal instruments such as carbon taxes.
