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Title:Fueling growth when oil peaks: Directed technological change and the limits to efficiency PDF Logo
Authors:André, Francisco J.
Smulders, Sjak
Issue Date:2012
Series/Report no.:CESifo Working Paper: Energy and Climate Economics 3977
Abstract:While fossil energy dependency has declined and energy supply has grown in the postwar world economy, future resource scarcity could cast its shadow on world economic growth soon if energy markets are forward looking. We develop an endogenous growth model that reconciles the current aggregate trends in energy use and productivity growth with the intertemporal dynamics of forward looking resource markets. Combining scarcity-rent driven energy supply (in the spirit of Hotelling) with profit-driven Directed Technical Change (in the spirit of Romer/Acemoglu), we generate transitional dynamics that can be qualitatively calibrated to current trends. The long-run properties of the model are studied to examine whether current trends are sustainable. We highlight the role of extraction costs in mining.
Subjects:non-renewable resources
energy
economic growth
innovation
directed technical change
JEL:O41
Q32
Q43
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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