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Energy and Capital: Further Exploration of E-K Interactions and Economic Performance

This paper explores some interactions between energy and capital that affect firms' productive performance through indirect effects of energy price changes. Different capital stocks (including high-tech capital) and different U.S. manufacturing industries (including high and low energy- and capital-intensive industries) are examined. This allows evaluation of cross-effects, expressed as the impact of changing capital composition on energy conservation (computer induced energy conservation) and energy price effects on capital returns (including composition, utilization and scale). The resulting effects on productivity growth are then considered, through the impact of energy price changes both on the demand and cost share of energy, and on the measured returns to different types of capital.

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Energy Specializations: Energy Modeling – Other

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q48: Energy: Government Policy, D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity, D22: Firm Behavior: Empirical Analysis

Keywords: E-K interactions, Energy, Capital, Productivity, Energy prices

DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-9

Published in Volume 14, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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