Directed Technical Change as a Response to Natural Resource Scarcity

@article{Hassler2021DirectedTC,
  title={Directed Technical Change as a Response to Natural Resource Scarcity},
  author={John Hassler and Per Krusell and Conny Olovsson},
  journal={Journal of Political Economy},
  year={2021},
  volume={129},
  pages={3039 - 3072}
}
We develop a quantitative macroeconomic theory of input-saving technical change to analyze how markets economize on scarce natural resources, with an application to fossil fuel. We find that aggregate US data call for a very low short-run substitution elasticity between energy and the capital/labor inputs. Our estimates imply that energy-saving technical change took off when the oil shocks hit in the 1970s. This response implies significant substitutability with the other inputs in the long run… 
View on U Chicago Press
econstor.eu
25 Citations
Highly Influential Citations
5
Background Citations
8
Methods Citations
4
Results Citations
2

25 Citations

Finite Resources and the World Economy
The Income Share of Energy and Substitution: A Macroeconomic Approach
As the atmospheric concentration of CO2 emissions has grown to record levels, calls have grown for governments to make steeper emissions cuts, requiring to reduce an economy’s use of fossil energy…
Sources of economic growth in models with non-renewable resources
Fuel for Economic Growth?
We set up an endogenous growth model in which the efficiency of both capital and fossil energy can be improved, whereas the efficiency of one alternative energy source is limited. With capital and…
Environmental Policy and Technical Change : Pollution Taxes , Access to Finance , and Firm Absorptive Capacity ∗
Firms respond to higher taxes on air pollution by increasing R&D and hence their capacity to absorb new technology. The R&D response to pollution taxation only appears after the taxes are introduced…
A Generalized Uzawa Growth Theorem and Capital-Augmenting Technological Change
We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. The theorem implies that neoclassical growth models need at least three factors of production to be consistent…
Can a Growing World be Fed when the Climate is Changing?
We study the capacity to meet food demand under conditions of climate change, economic and population growth. We take a novel approach to quantifying climate impacts, based on a model of the global…
Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation
In the United States, rising energy efficiency, rather than the use of less carbon-intensive energy sources, has driven the decline in the carbon intensity of output. Thus, understanding how…
Can Environmental Policy Encourage Technical Change? Emissions Taxes and R&D Investment in Polluting Firms
Higher country taxes on noxious manufacturing emissions lead to substantial increases in firm R&D spending. The R&D response is driven entirely by the high-pollution firms most affected by emissions…
Business Cycles with Cyclical Returns to Scale
We study business cycles with cyclical returns to scale. Contrary to tightly parameterized production functions (Cobb-Douglas and Constant Elasticity of Substitution), we empirically identify strong…
...
...

References

SHOWING 1-10 OF 92 REFERENCES
Labor- and Capital- Augmenting Technical Change
I analyze an economy in which profit-maximizing firms can undertake both labor- or capital-augmenting technological improvements. In the long run, the economy looks like the standard growth model…
Hicks meets Hotelling: the direction of technical change in capital–resource economies
ABSTRACT We analyze a two-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative profitability of…
Non-renewable resources and growth with vertical innovations: optimum, equilibrium and economic policies
The Environment and Directed Technical Change
TLDR
This paper shows that when inputs are sufficiently substitutable, sustainable growth can be achieved with temporary taxes/subsidies that redirect innovation toward clean inputs, and optimal policy involves both "carbon taxes" and research subsidies.
Directed Technical Change
For many problems in macroeconomics, development economics, labor economics, and international trade, whether technical change is biased towards particular factors is of central importance. This…
Appropriate Technology and Balanced Growth
We provide a general theoretical characterization of how firms’ technology choice on a technology frontier determines the long-run elasticity of substitution between capital and labour. We show that…
Endogenous Growth and Natural Resource Scarcity
Endogenous growth theory has rekindled interest in the role of innovation in determining long-term economic growth. Generally, this body of literature has ignored the contribution of natural…
The impact of energy conservation on technology and economic growth
Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model
A World Equilibrium Model of the Oil Market
We use new, comprehensive micro data on oil fields to build and estimate a structural model of the oil industry embedded in a general equilibrium model of the world economy. In the model, firms…
...
...