The Experts below are selected from a list of 96 Experts worldwide ranked by ideXlab platform
Patrick J. Kehoe - One of the best experts on this subject based on the ideXlab platform.
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Models of energy use: Putty-Putty versus Putty-Clay
American Economic Review, 1999Co-Authors: Andrew Atkeson, Patrick J. KehoeAbstract:In this paper, we build a version of the Putty-Clay Model in which there is a large variety of types of capital goods which are combined with energy in different fixed proportions. Our principal contribution is to establish easily checked conditions under which the problem of solving for the equilibrium of the Model economy reduces to a dynamic programming problem with only two endogenous state variables, regardless of the number of different types of capital goods that are allowed. In appropriate applications, this result allows us to avoid the 'curse of dimensionality' that typically plagues attempts to analyze the dynamics of economies with a wide variety of capital goods and binding non-negativity constraints on investment. We apply these results to study the equilibrium dynamics of value-added, investment, wages, and energy use in a simple Model of energy use with Putty-Clay capital.
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Models of energy use: Putty-Putty versus Putty-Clay
American Economic Review, 1999Co-Authors: Andrew Atkeson, Patrick J. KehoeAbstract:Energy use is inelastic in time-series data, but elastic in international cross-section data. Two Models of energy use reproduce these elasticities: a putty-putty Model with adjustment costs developed by Pindyck and Rotemberg (1983) and a Putty-Clay Model. In the Pindyck-Rotemberg Model, capital and energy are highly complementary in both the short run and the long run. In the Putty-Clay Model, capital and energy are complementary in the short run, but substitutable in the long run. We highlight the differences in the cross-section implications of the Models by considering the effect of an energy tax on output in both Models. In the putty-putty Model, an energy tax that doubles the price of energy leads to a fall in output in the long run of 33%. In contrast, the same tax in the Putty-Clay Model leads to a fall in output of only 5.3%.
Petter Frenger - One of the best experts on this subject based on the ideXlab platform.
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Expectations, substitution, and scrapping in a Putty-Clay Model
Journal of Economics, 1992Co-Authors: Erik Biørn, Petter FrengerAbstract:The paper presents a framework for analyzing the effect of changing expectations about future prices on a firm's choice of technique, and on its anticipated scrapping of capital equipment. Assuming a Putty-Clay technology, particular attention is paid to the way in which the scrapping age depends on the degree of ex ante input substitution. Numerical illustrations — based on data for Norwegian manufacturing for the years 1964–1983, an ex ante technology represented by a Generalized Leontief cost function in materials, energy, labor, and capital, and an ARMA representation of the price expectation mechanism — are presented. The results indicate that the price changes in this period may have had a substantial impact on planned scrapping, and on the chosen production techniques.
Andrew Atkeson - One of the best experts on this subject based on the ideXlab platform.
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Models of energy use: Putty-Putty versus Putty-Clay
American Economic Review, 1999Co-Authors: Andrew Atkeson, Patrick J. KehoeAbstract:In this paper, we build a version of the Putty-Clay Model in which there is a large variety of types of capital goods which are combined with energy in different fixed proportions. Our principal contribution is to establish easily checked conditions under which the problem of solving for the equilibrium of the Model economy reduces to a dynamic programming problem with only two endogenous state variables, regardless of the number of different types of capital goods that are allowed. In appropriate applications, this result allows us to avoid the 'curse of dimensionality' that typically plagues attempts to analyze the dynamics of economies with a wide variety of capital goods and binding non-negativity constraints on investment. We apply these results to study the equilibrium dynamics of value-added, investment, wages, and energy use in a simple Model of energy use with Putty-Clay capital.
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Models of energy use: Putty-Putty versus Putty-Clay
American Economic Review, 1999Co-Authors: Andrew Atkeson, Patrick J. KehoeAbstract:Energy use is inelastic in time-series data, but elastic in international cross-section data. Two Models of energy use reproduce these elasticities: a putty-putty Model with adjustment costs developed by Pindyck and Rotemberg (1983) and a Putty-Clay Model. In the Pindyck-Rotemberg Model, capital and energy are highly complementary in both the short run and the long run. In the Putty-Clay Model, capital and energy are complementary in the short run, but substitutable in the long run. We highlight the differences in the cross-section implications of the Models by considering the effect of an energy tax on output in both Models. In the putty-putty Model, an energy tax that doubles the price of energy leads to a fall in output in the long run of 33%. In contrast, the same tax in the Putty-Clay Model leads to a fall in output of only 5.3%.
Erik Biørn - One of the best experts on this subject based on the ideXlab platform.
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Expectations, substitution, and scrapping in a Putty-Clay Model
Journal of Economics, 1992Co-Authors: Erik Biørn, Petter FrengerAbstract:The paper presents a framework for analyzing the effect of changing expectations about future prices on a firm's choice of technique, and on its anticipated scrapping of capital equipment. Assuming a Putty-Clay technology, particular attention is paid to the way in which the scrapping age depends on the degree of ex ante input substitution. Numerical illustrations — based on data for Norwegian manufacturing for the years 1964–1983, an ex ante technology represented by a Generalized Leontief cost function in materials, energy, labor, and capital, and an ARMA representation of the price expectation mechanism — are presented. The results indicate that the price changes in this period may have had a substantial impact on planned scrapping, and on the chosen production techniques.
Thomas S. Lontzek - One of the best experts on this subject based on the ideXlab platform.
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R&D-driven Biases in Energy-Saving Technical Change: A "Putty- Practically-Clay" Approach*
2008Co-Authors: Adriaan Van Zon, Thomas S. LontzekAbstract:This paper deals with the problem of tackling the adverse effect of output growth on environmental quality. For this purpose we use an intermediate sector that builds "putty-practically-clay" capital consisting of an amalgam of energy and raw capital used for final goods production. The puttypractically-clay Model is a strongly simplified version of a full Putty-Clay Model, that mimics all the relevant behaviour of a full Putty-Clay Model, but that does not entail the administrative complications of a full Putty-Clay Model. In addition, we introduce an R&D sector that develops renewable and conventional energy-related technologies. The allocation of R&D activities over these two uses of R&D gives rise to an induced bias in technical change in line with Kennedy (1964). In the context of our Model, this implies that technological progress is primarily driven by the desire to counteract the upward pressure on production cost implied by a continuing price increase of conventional energy resources. By means of illustrative Model simulations we study the effects of energy policy on the dynamics of the Model for alternative policy options aimed at achieving Greenhouse Gas emission reductions. We identify the conditions under which energy policy might partly backfire and present some non-standard policy implications.
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A 'putty-practically-clay' vintage Model with R&D driven biases in energy-saving technical change
2005Co-Authors: Adriaan Van Zon, Thomas S. LontzekAbstract:This paper deals with the problem of tackling the adverse effect of output growth on environmental quality. For this purpose we use an intermediate sector that builds 'putty-practically-clay' capital consisting of an energy-raw capital amalgam used for final goods production. The putty-practically-clay Model is a strongly simplified version of a full Putty-Clay Model, that mimics all the relevant behaviour of a full Putty-Clay Model, but that does not entail the administrative hassle of a full Putty-Clay vintage Model. In addition to this, we introduce an R&D sector that develops renewable- and conventional energy-based technologies. The allocation of R&D activities over these two uses of R&D gives rise to an induced bias in technical change very much as in Kennedy (1964). In the context of our Model, this implies that technological progress is primarily driven by the desire to counteract the upward pressure on production cost implied by a continuing price increase of conventional energy resources. Hotelling's rule suggests that this price rise is unavoidable in the face of the ongoing depletion of conventional energy reserves. By means of some illustrative Model simulations we study the effects of energy policy on the dynamics of the Model for alternative policy options aimed at achieving GHG emission reductions. We identify the conditions under which energy policy might partly backfire and present some non-standard policy implications.
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A ‘putty-practically-clay’ vintage Model with R&D driven biases in energy-saving technical change
2005Co-Authors: Adriaan Van Zon, Thomas S. LontzekAbstract:This paper deals with the problem of tackling the adverse effect of output growth on environmental quality. For this purpose we use an intermediate sector that builds ‘putty-practically-clay’ capital consisting of an energy-raw capital amalgam used for final goods production. The putty-practically-clay Model is a strongly simplified version of a full Putty-Clay Model, that mimics all the relevant behaviour of a full Putty-Clay Model, but that does not entail the administrative hassle of a full Putty-Clay vintage Model. In addition to this, we introduce an R&D sector that develops renewable- and conventional energy-based technologies. The allocation of R&D activities over these two uses of R&D gives rise to an induced bias in technical change very much as in Kennedy (1964). In the context of our Model, this implies that technological progress is primarily driven by the desire to counteract the upward pressure on production cost implied by a continuing price increase of conventional energy resources. Hotelling’s rule suggests that this price rise is unavoidable in the face of the ongoing depletion of conventional energy reserves. By means of some illustrative Model simulations we study the effects of energy policy on the dynamics of the Model for alternative policy options aimed at achieving GHG emission reductions. We identify the conditions under which energy policy might partly backfire and present some non-standard policy implications.
