The Role of Energy in the Industrial Revolution and Modern Economic Growth

I wrote this paper with Astrid Kander a few months ago following my visit to Lund, but it has only just been added to RePEc. In the paper, we develop a simple model of economic growth that allows for a significant role for energy and we apply the model to the Swedish data for the 19th and 20th centuries. To keep things as simple as possible the model is an extension of the famous Solow growth

Jones and Romer's Stylized Facts

Actually this very readable article is titled: "The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital". Kaldor proposed six "stylized facts" about the economic growth process. Jones and Romer propose six new ones. They are (in bold with my comments in plain text after them):1) Increases in the extent of the market. Increased flows of goods, ideas, finance, and people—via

The Role of Energy in Economic Growth

A few months ago I serialized a paper I was revising on the role of energy in economic growth. I didn't include all the material in the paper and it wasn't serialized in order. The paper will be appearing next year in Ecological Economics Reviews, which is an annual edition of the Annals of the New York Academy of Sciences. A working paper version of the paper is now available in the new working

Madsen et al.: Four centuries of British economic growth: The roles of technology and population

In a paper forthcoming in the Journal of Economic Growth* Jakob Madsen et al. test the ability of alternative endogenous growth theories to explain the British Industrial Revolution. They conclude that Schumpetarian growth theory can explain the data while "semi-endogenous growth theory" cannot. Madsen recently won an ARC fellowship to pursue this research further. Interestingly, when the change

Did Incomes Grow in Pre-Industrial England?

This is a current point of contention among economic historians. Gregory Clark thinks that in the long-run they did not though they fluctuated considerably. In the wake of the Black Death incomes were high due to the increase in land per worker and they subsequently fell as population grew till eventually rising gain as the industrial revolution approached. I think this much is agreed but the

Recent Papers of Interest in Ecological Economics:

van den Bergh, J. C. J. M., Environment versus growth — A criticism of “degrowth” and a plea for “a-growth”, Ecological Economics.van den Bergh makes a much more extensive version of the main argument I made in my review of Tim Jackson's book Prosperity without Growth. There aren't policy levers that can directly stop growth and it might not be what is needed to solve environmental problems

Causes of the Demographic Transition

Oded Galor has made many contributions to growth theory and population economics and the connections between them. A http://ideas.repec.org/p/bro/econwp/2010-12.html">new working paper examines various economic theories of the causes behind the demographic transition. In Galor's terminology the demographic transition refers specifically to the decline in fertility rates and population growth.

LEGS

I attended a meeting of the LEGS Platform who are funding my visit to Lund. LEGS stands for Long-term Energy Growth and Sustainability. As the website says: "It a new platform for inter-faculty and interdisciplinary knowledge creation and exchange at LUSEM (Lund University School of Economics and Management). It was founded March 2009 on the basis of a strategic decision by the vice chancellor of

Seminar at Lund

If you are going to be in southern Sweden or eastern Denmark, you may be interested that I will be giving a seminar on 15th September at the Department of Economic History at Lund University. Topic: "The Role of Energy in Long-Run Economic Growth". I don't know the time or exact location yet but I'm sure the department can help out on that. For those of you in Canberra I will be speaking on the

Ecological Economics Reviews

A while back I did a series of posts that serialized a paper I was revising on energy and growth, starting with this post. The paper has now been accepted for publication in the 2011 issue of Ecological Economics Reviews, which is a special annual issue of the Annals of the New York Academy of Sciences edited by Bob Costanza and Karin Limburg (Rated B by the ARC BTW). I just now have to switch my

Peter May's Review of "Prosperity without Growth"

I don't remember seeing this before, except in the form of a special review section - Two reviews of the same book in the same journal. http://stochastictrend.blogspot.com/2009/11/review-of-prosperity-without-growth.html">You've seen my version. Now here is Peter May's version.

Inheritance and Economic Growth

I am reading an interesting paper by Thomas Piketty on inheritance and economic growth. It's a long paper with lots of stuff in it. But here is the key point. They construct time series for inheritance (both bequests and inter-vivos transfers) for France over almost 200 years. One source is French estate tax data and the other a model of demography, saving etc. The gap between the two series (

Seminar 26th October

I know this is a long time off, but I just agreed to do a seminar at 2pm on 26th October in Seminar Room B, Coombs Building, ANU. Title is: "The Role of Energy in Long-Run Economic Growth". I will report on my work in collaboration with Astrid Kander at University of Lund on energy and growth in Sweden over a couple of centuries. I also have started supervising a graduate student as part of an

Call for References: The Role of Energy in Economic Growth

Back in April I did a series of posts on energy and economic growth which serialised a review paper I was editing on the topic. A couple of those have been among my post popular posts in the last few months. Now I am revising the paper again for the final version. The referees made a lot of comments but I am also reading some additional papers and seeing if they fit into the story. So if you

Angus Maddison Dies

Just heard that Angus Maddison died. The Economist has an obituary. I visited Gronigen a few years ago but didn't get to meet him. Just a few days ago I was checking his data on historical GDP. The work of my colleagues such as Astrid Kander and Paul Warde follows in this tradition in reconstructing the energy history of Europe.

The Environment and Directed Technical Change: Acemoglu et al.

Acemoglu, Aghion, Bursztyn, and Hemous put out an interesting NBER Working Paper last October. The abstract is below. They carry out a simulation which shows that a carbon tax alone is significantly inferior in terms of loss of consumption to a combination of a carbon tax and clean technology development subsidy. Results depend on the elasticity of substitution between dirty and clean inputs and

Energy and Growth Survey: Conclusions

We conclude that the theoretical and empirical evidence indicates that energy use and output are tightly coupled with energy availability playing a key role in enabling growth. However, the greater availability of energy, technical progress, and the employment of higher quality fuels has allowed less energy to be used per unit output and has reduced the constraint that energy resources place on

Shifts in the Composition of Output

This is the penultimate section of the paper that I'll post. Now I'm going on to rewriting the conclusions and then a massive edit. I've got 15,000 words and 179 references!Shifts in the Composition of OutputOutput mix typically changes over the course of economic development. In the earlier phases of development there is a shift away from agriculture towards heavy industry, while in the later

Innovation and Energy Efficiency

Changes in the energy/GDP ratio that are not related to changes in the relative price of energy are called changes in the autonomous energy efficiency index (AEEI, Kaufmann, 2004). These could be due to any of the determinants of the relationship between energy and output listed at the beginning of this section and not just technological change. Even A in (3) is just general TFP and, therefore,

Substitutability of Energy and Capital

There is a large empirical literature on the issue of whether capital and energy are substitutes or complements and on how substitutable they are (e.g. Berndt and Wood, 1979; Apostolakis, 1990; Thompson and Taylor, 1995; Frondel and Schmidt, 2002; Thompson, 1997; Stern, 2007; Koetse et al., 2008). Substitutability can be measured using the Hicks or direct elasticity of substitution, which