NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Models of Energy Use: Putty-Putty versus Putty-Clay

Andrew Atkeson, Patrick J. Kehoe

NBER Working Paper No. 4833
Issued in August 1994
NBER Program(s):   EFG

In this paper, we build a version of the putty-clay model in which there is a large variety of types of capital goods which are combined with energy in different fixed proportions. Our principal contribution is to establish easily checked conditions under which the problem of solving for the equilibrium of the model economy reduces to a dynamic programming problem with only two endogenous state variables, regardless of the number of different types of capital goods that are allowed. In appropriate applications, this result allows us to avoid the 'curse of dimensionality' that typically plagues attempts to analyze the dynamics of economies with a wide variety of capital goods and binding non-negativity constraints on investment. We apply these results to study the equilibrium dynamics of value-added, investment, wages, and energy use in a simple model of energy use with putty-clay capital.

download in pdf format
   (254 K)

email paper

This paper is available as PDF (254 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4833

Published: American Economic Review, Vol. 89, no. 4 (September 1999): 1028-1043.

Users who downloaded this paper also downloaded these:
Gilchrist and Williams w6812 Putty-Clay and Investment: A Business Cycle Analysis
Rotemberg and Woodford w5634 Imperfect Competition and the Effects of Energy Price Increases on Economic Activity
Gilchrist and Williams w10446 Investment, Capacity, and Uncertainty: A Putty-Clay Approach
Kahn and Mansur w16538 How Do Energy Prices, and Labor and Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach
Fullerton and Heutel w15788 Analytical General Equilibrium Effects of Energy Policy on Output and Factor Prices
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us