Abrell J., Rausch S. and Schwerin H

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This paper develops  a theory of vintage capital and energy use in businesses and households to measure the response of energy use to energy- saving technological change. Calibration of the model’s balanced growth path to U.S. post-WWII data shows that energy efficiency increased on average by about three percent per year. Higher energy efficiency increased rather than reduced energy use as equipment- specific technological progress enhanced energy use by more than higher energy prices reduced it. The energy rebound in response to technological progress (higher energy prices) was 125 percent of (reduced energy use by 30 percent below) hypothetical energy savings.

Available at: http://d.repec.org/n?u=RePEc:eth:wpswif:16-227