Elasticity of substitution between clean and dirty energy inputs : a macroeconomic perspective

Chris Papageorgiou, Marianne Saam, and Patrick Schulte

Recently Acemolgu, Aghion, Bursztyn and Hemous (AER 2012) formulated a model in which a high macroeconomic elasticity of substitution between clean and dirty production represents a crucial condition for green growth. Until now it has never been systematically estimated. Using a novel panel of cross-country sectoral data, we formulate specifications of nested CES production functions that allow to estimate a special case of this parameter: the elasticity of substitution between clean and dirty energy inputs. Contrary to what is expected based on the earlier interfuel substitution literature, we find evidence that this elasticity exceeds one.

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Year of publication:	2013
Authors:	Papageorgiou, Chris ; Saam, Marianne ; Schulte, Patrick
Publisher:	Mannheim : ZEW
Subject:	Clean and dirty energy inputs \| aggregate elasticity of substitution \| CES function \| cross-country sectoral data \| environmental policy \| Substitutionselastizität \| Elasticity of substitution \| Energiesubstitution \| Energy substitution \| Erneuerbare Energie \| Renewable energy \| Theorie \| Theory \| Faktorsubstitution \| Factor substitution \| Umweltpolitik \| Environmental policy \| CES-Produktionsfunktion \| CES production function