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SUMMARY:The Effect of Energy Prices on Operation and Investment in OECD Co
 untries: Evidence from the Vintage Capital Model - Dr Karsten Neuhoff &amp
 \; Dr Jevgenijs Steinbuks. Faculty of Economics\, University of Cambridge
DTSTART:20090529T133000Z
DTEND:20090529T143000Z
UID:TALK18467@talks.cam.ac.uk
CONTACT:Miss Emily Woods
DESCRIPTION:This paper analyzes the effect of energy prices on energy inte
 nsity\, separately accounting for operational and investment choices in di
 fferent sectors. For this purpose\, capital stock is characterised by vint
 ages with different intensities of energy use\, calculated as a function o
 f exogenously-evolving technology availability and energy prices. Our mode
 l allows for a differentiation between the flexibility of substitution bet
 ween factors of production (labour\, energy and materials)\, and the poten
 tial for more efficient use of these inputs by choosing more efficient tec
 hnologies at the time of investment.\nThe model is employed for 23 OECD co
 untries\, four sectors\, and their respective prices for final energy cons
 umption over the period 1990-2005. The explicit representation of capital 
 stock explains the delayed response to energy price changes. At the sector
  level\, the explanatory value of the model with vintage capital stock is 
 significantly improved. The results of the model confirm the significance 
 of the capital stock in future energy and materials intensity of productio
 n. These findings point to the importance of action on energy and climate 
 policy to provide incentives for early investment in energy - and material
 s-efficient capital stock\, and reduce future energy and materials consump
 tion. 
LOCATION:Land Economy Laundress Lane seminar room 1
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