Thursday, October 20, 2011
Guest Post on the "Oil Drum"
A guest post written by me appeared today on the blog "The Oil Drum". It's a summary and commentary on my paper "The Role of Energy in Economic Growth" which appeared in Ecological Economics Reviews this year. There are a lot of comments. Go over there to read them. I'll try to respond to some of them soon (it's a crazy day over, today for me (Energy Change Institute open day where I'm presenting, CRWF8000 teaching, and the IPCC WG3 ZOD deadline looming). I've also added "The Oil Drum" to the blogroll.
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I read your posts and comments at The Oil Drum, mostly really good as usual. However, one reason growth theorists focused only on labour and capital is because they alone constitute value added in the form of wages and profits, and eliminate intermediate goods. The same is true of the final consumption + investment approach to deriving value added. But in the real world intermediate goods are where the action is and where the role of energy plays out, it being of course the prince of intermediate goods (unless you are at Yale and believe the tripe delivered by Muller Mendelsohn and Nordhaus in the AER 2011, extolled today in a letter in the Canberra Times).
ReplyDeleteYour paper does not so far as I know consider the effect on energy demand and GDP of the plans here to double and more the price of electricity over and above the 55% already achieved. Like the NBN, those plans are tantamount to the claims that breaking windows raises GDP and employment (by Gillard, Combet, with the full backing of the Garnauts and Steffens of this world, none of whom has heard of Bastiat - whose critique only falls away if there is unemployment, not the current situation here).
Yes, absolutely correct about value added. Energy availability then affects total factor productivity - the "residual". You can't really use simplistic growth models of this sort to evaluate the impacts of climate policy, though I'm getting those kinds of papers increasingly sent to me for review.
ReplyDeleteI'm sorry Google seems to have eaten your comment on my post on the special issue on RCPs though it sent me a notification that you had posted as it does on all comments.