Fueling growth when oil peaks

Directed technological change and the limits to efficiency

F.J. Andre, Sjak A. Smulders

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Pages (from-to)18-39
JournalEuropean Economic Review
Volume69
Issue numberJuly 2014
DOIs
Publication statusPublished - Jul 2014

Fingerprint

Peak oil
Technological change
Energy
Resources
Endogenous growth model
Hotelling
Transitional dynamics
Directed technical change
Energy market
Energy productivity
Economic growth
Resource scarcity
Profit
Scarcity
Productivity growth
Rent
Energy use
World economy
Costs

Keywords

  • non-renewable resources
  • energy
  • economic growth
  • innovation
  • directed technical change

Cite this

@article{f8dc7d52fc2d49e397df4e5cb7f2740e,
title = "Fueling growth when oil peaks: Directed technological change and the limits to efficiency",
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.",
keywords = "non-renewable resources, energy, economic growth, innovation, directed technical change",
author = "F.J. Andre and Smulders, {Sjak A.}",
year = "2014",
month = "7",
doi = "10.1016/j.euroecorev.2013.10.007",
language = "English",
volume = "69",
pages = "18--39",
journal = "European Economic Review",
issn = "0014-2921",
publisher = "Elsevier Science BV",
number = "July 2014",

}

Fueling growth when oil peaks : Directed technological change and the limits to efficiency. / Andre, F.J.; Smulders, Sjak A.

In: European Economic Review, Vol. 69, No. July 2014, 07.2014, p. 18-39.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Fueling growth when oil peaks

T2 - Directed technological change and the limits to efficiency

AU - Andre, F.J.

AU - Smulders, Sjak A.

PY - 2014/7

Y1 - 2014/7

N2 - 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.

AB - 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.

KW - non-renewable resources

KW - energy

KW - economic growth

KW - innovation

KW - directed technical change

U2 - 10.1016/j.euroecorev.2013.10.007

DO - 10.1016/j.euroecorev.2013.10.007

M3 - Article

VL - 69

SP - 18

EP - 39

JO - European Economic Review

JF - European Economic Review

SN - 0014-2921

IS - July 2014

ER -