Santos, João, Viana, Miguel, Nieto, Jaime et al. (3 more authors) (2024) The Impact of Energy Efficiency on Economic Growth:Application of the MARCO Model to the Portuguese Economy 1960–2014. Energies. 2688. ISSN 1996-1073
Abstract
The benefits of energy efficiency are recognized in multiple socio-economic spheres. Still, the quantitative impact on macroeconomic performance is not fully understood, as modeling tools are not thermodynamically consistent—failing to explicitly include the useful stage of energy flows and/or thermodynamic efficiencies in primary–final–useful energy transformations. Misspecification in the link between energy use and the economy underplays the role of energy use and efficiency in economic growth. In this work, we develop and implement the Macroeconometric Resource Consumption model for Portugal (MARCO-PT), 1960–2014. Based on the post-Keynesian framework developed for the United Kingdom (MARCO-UK), our model explicitly includes thermodynamic energy efficiency, extending the analysis to the useful stage of energy flows. The model’s stochastic equations are econometrically estimated. The historical influence of key variables—namely thermodynamic energy efficiency—on economic output is assessed through counterfactual simulations and computation of year-by-year output elasticities. The MARCO-PT model adequately describes the historical behavior of endogenous variables. Although its influence has decreased over time, thermodynamic efficiency has consistently been the major contributor to economic growth between 1960–2014, with an average output elasticity of 0.46. Total useful exergy is also a major contributing factor, with an average output elasticity of 0.29. Both have a higher influence than capital, labor, or other energy variables (final energy, prices). An adequate integration of thermodynamic efficiency is thus crucial for macroeconomic models.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | Funding Information: This work was supported by FCT/MCTES (PIDDAC) through project LARSyS\u2014FCT Pluriannual funding 2020\u20132023 (UIDB/EEA/50009/2020). This research was also funded by the Portuguese Recovery and Resilience Program (PRR), IAPMEI/ANI/FCT, Blockchain.PT, Contract no. 51. We acknowledge support for Paul Brockway under the EPSRC Fellowship award EP/R024251/1. Publisher Copyright: © 2024 by the authors. |
Keywords: | economic growth,energy economy modeling,energy efficiency,output elasticity,thermodynamics |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Sciences (York) > Environment and Geography (York) |
Depositing User: | Pure (York) |
Date Deposited: | 27 Jun 2024 12:10 |
Last Modified: | 18 Dec 2024 00:26 |
Published Version: | https://doi.org/10.3390/en17112688 |
Status: | Published |
Refereed: | Yes |
Identification Number: | 10.3390/en17112688 |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:214039 |
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Filename: energies-17-02688.pdf
Description: The Impact of Energy Efficiency on Economic Growth: Application of the MARCO Model to the Portuguese Economy 1960–2014
Licence: CC-BY 2.5