Does a small cost share reflect a negligible role for energy in economic production? Testing for aggregate production functions including capital, labor, and useful exergy through a cointegration-based method

@inproceedings{Santos2016DoesAS,
  title={Does a small cost share reflect a negligible role for energy in economic production? Testing for aggregate production functions including capital, labor, and useful exergy through a cointegration-based method},
  author={Jo{\~a}o Santos and Tiago Domingos and T{\^a}nia Sousa and Miguel St. Aubyn},
  year={2016}
}
Neoclassical models disregard the role of energy in production, equating a factor's output elasticity with its cost share, but failing to explain growth without a residual term. In contrast, ecological economics acknowledges energy's importance in production, regardless of its cost share. The aggregate production function (APF) concept, central to neoclassical theory, is also disputed. We apply cointegration analysis to test for APFs between output, capital, and labor. We investigate the… CONTINUE READING

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