Testing the Validity of Directed Technical Change for Green and Fossil Energy Inputs: The Case of Germany
Abstract
In this study, the validity of directed technical change in Germany over the period 1995–2020 is tested. In the analysis—where nested CES functions are employed—two separate models are constructed to examine the capital–labor and energy–renewable energy groups as a two-tier structure. In both models, returns to scale are assumed to be approximately unitary. In the first model, the capital–labor and energy–renewable groups carry equal weight at the lower tier, whereas, at the upper tier, the dominance of the capital–labor group is clearly observed; in the second model, however, the energy group is found to have the larger weight. Although a strong substitution potential is detected among energy forms, the substitution elasticity between capital and labor fails to achieve statistical significance in both the first and the second model. The substitution capability between the two subgroups is also found to be weak. The R² values in both estimation sets are high, confirming the overall goodness of fit.
References
- Acemoglu, D., & Restrepo, P. (2018). The race between man and machine: Implications of technology for growth, factor shares, and employment. American economic review, 108(6), 1488-1542.
- Acemoglu, D., Aghion, P., Bursztyn, L., & Hemous, D. (2012). The environment and directed technical change. American economic review, 102(1), 131-166.
- Aghion, P., Dechezleprêtre, A., Hemous, D., Martin, R., & Van Reenen, J. (2016). Carbon taxes, path dependency, and directed technical change: Evidence from the auto industry. Journal of Political Economy, 124(1), 1-51. Allen, R. G. D. [1938], Mathematical Analysis for Economists, London: Macmillan.
- Arrow, K. J., Chenery, H. B., Minhas, B. S., & Solow, R. M. (1961). Capital-labor substitution and economic efficiency. The review of Economics and Statistics, 225-250.
- Autor, D., Goldin, C., & Katz, L. F. (2020, May). Extending the race between education and technology. In AEA papers and proceedings (Vol. 110, pp. 347-351). 2014 Broadway, Suite 305, Nashville, TN 37203: American Economic Association.
- Bosetti, V., Carraro, C., Galeotti, M., Massetti, E., & Tavoni, M. (2006). A world induced technical change hybrid model. The Energy Journal, 27(2_suppl), 13-37.
- Cobb, C. W., & Douglas, P. H. (1928). A theory of production. The American Economic Review, 18(1), 139–165.
- Haas, T. (2019). Comparing energy transitions in Germany and Spain using a political economy perspective. Environmental innovation and societal transitions, 31, 200-210.
- Hassler, J., Krusell, P., & Olovsson, C. (2012). Energy-saving technical change (No. w18456). National Bureau of Economic Research.
- Hassler, J., Krusell, P., Olovsson, C., & Reiter, M. (2020). On the effectiveness of climate policies. IIES WP, 53, 54. Hicks, J. (1970). Elasticity of substitution again: substitutes and complements. Oxford economic papers, 22(3), 289-296.
- Jaffe, A. B., Newell, R. G., & Stavins, R. N. (1999). Energy-Efficient Technologıes and Clımate Change Polıcıes: Issues And Evıdence.
- Kemfert, C., & Welsch, H. (2000). Energy-capital-labor substitution and the economic effects of CO2 abatement: Evidence for Germany. Journal of Policy Modeling, 22(6), 641-660.
- Klump, R., & de La Grandville, O. (2000). Economic growth and the elasticity of substitution: Two theorems and some suggestions. American Economic Review, 91(1), 282-291.
- Manne, A., Mendelsohn, R., & Richels, R. (1995). MERGE: A model for evaluating regional and global effects of GHG reduction policies. Energy policy, 23(1), 17-34.
- McFadden, D. (1963). Constant elasticity of substitution production functions. The Review of Economic Studies, 30(2), 73-83.
- Okagawa, A., & Kanemi, B. A. N. (2008). Estimation of substitution elasticities for CGE models (No. 08-16). Parry, I. W., Norregaard, J., & Heine, D. (2012). Environmental tax reform: principles from theory and practice. Annu. Rev. Resour. Econ., 4(1), 101-125.
- Popp, D. (2004). ENTICE: endogenous technological change in the DICE model of global warming. Journal of Environmental Economics and management, 48(1), 742-768.
- Sato, K. (1967). A two-level constant-elasticity-of-substitution production function. The Review of Economic Studies, 34(2), 201-218.
- Sovacool, B. K. (2017). Reviewing, reforming, and rethinking global energy subsidies: towards a political economy research agenda. Ecoogical Economics, 135, 150-163.
- Uzawa, H. (1962). Production functions with constant elasticities of substitution. The review of economic studies, 29(4), 291-299.
- Van der Werf, E. (2008). Production functions for climate policy modeling: An empirical analysis. Energy economics, 30(6), 2964-2979.
Yeşil ve Fosil Enerji Girdileri İçin Yönlendirilmiş Teknik Değişimin Geçerliliğinin Test Edilmesi, Almanya Örneği
Abstract
Bu çalışmada 1995-2020 dönemi için Almanya’da yönlendirilmiş teknik değişimin geçerliliği test edilmiştir. Nested CES fonksiyonlarının analiz için kullanıldığı çalışmada kurulan modellemelerde sermaye-işgücü ve enerji-yenilenebilir enerji gruplarını iki katmanlı yapısıyla iki model kurularak incelenmiştir. Her iki modelde ölçek getirisi yaklaşık birim elastik alınmıştır. İlk modelde sermaye-işgücü ve enerji-yenilenebilir grupları alt kademede eşit ağırlık taşırken, üst düzeyde sermaye-işgücünün baskınlığı belirgin olarak gözlemlenmiştir; ikinci modelde ise enerji grubunun ağırlığı daha tespit edilmiştir. Enerji formları arasında güçlü bir ikame potansiyeli tespit edilmesine karşın, sermaye ve işgücü arasındaki ikame esnekliği hem birinci hem de ikinci modelde anlamlılık kazanamamıştır. İki alt küme arasındaki ikame kabiliyeti de zayıf olarak tespit edilmiştir. R² değerleri her iki tahmin setinde anlamlı olup, genel uyumun yüksekliğini teyit etmiştir.
References
- Acemoglu, D., & Restrepo, P. (2018). The race between man and machine: Implications of technology for growth, factor shares, and employment. American economic review, 108(6), 1488-1542.
- Acemoglu, D., Aghion, P., Bursztyn, L., & Hemous, D. (2012). The environment and directed technical change. American economic review, 102(1), 131-166.
- Aghion, P., Dechezleprêtre, A., Hemous, D., Martin, R., & Van Reenen, J. (2016). Carbon taxes, path dependency, and directed technical change: Evidence from the auto industry. Journal of Political Economy, 124(1), 1-51. Allen, R. G. D. [1938], Mathematical Analysis for Economists, London: Macmillan.
- Arrow, K. J., Chenery, H. B., Minhas, B. S., & Solow, R. M. (1961). Capital-labor substitution and economic efficiency. The review of Economics and Statistics, 225-250.
- Autor, D., Goldin, C., & Katz, L. F. (2020, May). Extending the race between education and technology. In AEA papers and proceedings (Vol. 110, pp. 347-351). 2014 Broadway, Suite 305, Nashville, TN 37203: American Economic Association.
- Bosetti, V., Carraro, C., Galeotti, M., Massetti, E., & Tavoni, M. (2006). A world induced technical change hybrid model. The Energy Journal, 27(2_suppl), 13-37.
- Cobb, C. W., & Douglas, P. H. (1928). A theory of production. The American Economic Review, 18(1), 139–165.
- Haas, T. (2019). Comparing energy transitions in Germany and Spain using a political economy perspective. Environmental innovation and societal transitions, 31, 200-210.
- Hassler, J., Krusell, P., & Olovsson, C. (2012). Energy-saving technical change (No. w18456). National Bureau of Economic Research.
- Hassler, J., Krusell, P., Olovsson, C., & Reiter, M. (2020). On the effectiveness of climate policies. IIES WP, 53, 54. Hicks, J. (1970). Elasticity of substitution again: substitutes and complements. Oxford economic papers, 22(3), 289-296.
- Jaffe, A. B., Newell, R. G., & Stavins, R. N. (1999). Energy-Efficient Technologıes and Clımate Change Polıcıes: Issues And Evıdence.
- Kemfert, C., & Welsch, H. (2000). Energy-capital-labor substitution and the economic effects of CO2 abatement: Evidence for Germany. Journal of Policy Modeling, 22(6), 641-660.
- Klump, R., & de La Grandville, O. (2000). Economic growth and the elasticity of substitution: Two theorems and some suggestions. American Economic Review, 91(1), 282-291.
- Manne, A., Mendelsohn, R., & Richels, R. (1995). MERGE: A model for evaluating regional and global effects of GHG reduction policies. Energy policy, 23(1), 17-34.
- McFadden, D. (1963). Constant elasticity of substitution production functions. The Review of Economic Studies, 30(2), 73-83.
- Okagawa, A., & Kanemi, B. A. N. (2008). Estimation of substitution elasticities for CGE models (No. 08-16). Parry, I. W., Norregaard, J., & Heine, D. (2012). Environmental tax reform: principles from theory and practice. Annu. Rev. Resour. Econ., 4(1), 101-125.
- Popp, D. (2004). ENTICE: endogenous technological change in the DICE model of global warming. Journal of Environmental Economics and management, 48(1), 742-768.
- Sato, K. (1967). A two-level constant-elasticity-of-substitution production function. The Review of Economic Studies, 34(2), 201-218.
- Sovacool, B. K. (2017). Reviewing, reforming, and rethinking global energy subsidies: towards a political economy research agenda. Ecoogical Economics, 135, 150-163.
- Uzawa, H. (1962). Production functions with constant elasticities of substitution. The review of economic studies, 29(4), 291-299.
- Van der Werf, E. (2008). Production functions for climate policy modeling: An empirical analysis. Energy economics, 30(6), 2964-2979.
Details
| Primary Language | Turkish |
|---|---|
| Subjects | Environment Policy |
| Journal Section | Research Articles |
| Authors | |
| Publication Date | June 30, 2025 |
| Submission Date | May 31, 2025 |
| Acceptance Date | June 27, 2025 |
| Published in Issue | Year 2025 Volume: 7 Issue: 1 |
ANADOLU STRATEJİ DERGİSİ / JOURNAL OF ANATOLIAN STRATEGY e-ISSN: 2687-5721