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The role of energy in the industrial revolution and modern economic growth

Stern, David and Kander, Astrid LU (2012) In Energy Journal 33(3). p.125-152
Abstract
The expansion in the supply of energy services over the last couple of centuries has reduced the apparent importance of energy in economic growth despite energy being an essential production input. We demonstrate this by developing a simple extension of the Solow growth model, which we use to investigate 200 years of Swedish data. We find that the elasticity of substitution between a capital-labor aggregate and energy is less than unity, which implies that when energy services are scarce they strongly constrain output growth resulting in a low income steady-state. When energy services are abundant the economy exhibits the behavior of the “modern growth regime” with the Solow model as a limiting case. The expansion of energy services is... (More)
The expansion in the supply of energy services over the last couple of centuries has reduced the apparent importance of energy in economic growth despite energy being an essential production input. We demonstrate this by developing a simple extension of the Solow growth model, which we use to investigate 200 years of Swedish data. We find that the elasticity of substitution between a capital-labor aggregate and energy is less than unity, which implies that when energy services are scarce they strongly constrain output growth resulting in a low income steady-state. When energy services are abundant the economy exhibits the behavior of the “modern growth regime” with the Solow model as a limiting case. The expansion of energy services is found to be a major factor in explaining economic growth in Sweden, especially before the second half of the 20th century. After 1950, labor-augmenting technological change becomes the dominant factor driving growth though energy still plays a role. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Unified growth theory, energy, Industrial Revolution, economic growth
in
Energy Journal
volume
33
issue
3
pages
125 - 152
publisher
International Association for Energy Economics
external identifiers
  • wos:000305842000005
  • scopus:84865008304
ISSN
0195-6574
DOI
10.5547/01956574.33.3.5
language
English
LU publication?
yes
id
7eea279a-e1dc-4ddb-8a85-36f44fdbd70f (old id 2797620)
alternative location
http://www.iaee.org/en/publications/ejarticle.aspx?id=2488
date added to LUP
2012-06-15 13:03:34
date last changed
2017-11-05 03:53:59
@article{7eea279a-e1dc-4ddb-8a85-36f44fdbd70f,
  abstract     = {The expansion in the supply of energy services over the last couple of centuries has reduced the apparent importance of energy in economic growth despite energy being an essential production input. We demonstrate this by developing a simple extension of the Solow growth model, which we use to investigate 200 years of Swedish data. We find that the elasticity of substitution between a capital-labor aggregate and energy is less than unity, which implies that when energy services are scarce they strongly constrain output growth resulting in a low income steady-state. When energy services are abundant the economy exhibits the behavior of the “modern growth regime” with the Solow model as a limiting case. The expansion of energy services is found to be a major factor in explaining economic growth in Sweden, especially before the second half of the 20th century. After 1950, labor-augmenting technological change becomes the dominant factor driving growth though energy still plays a role.},
  author       = {Stern, David and Kander, Astrid},
  issn         = {0195-6574},
  keyword      = {Unified growth theory,energy,Industrial Revolution,economic growth},
  language     = {eng},
  number       = {3},
  pages        = {125--152},
  publisher    = {International Association for Energy Economics},
  series       = {Energy Journal},
  title        = {The role of energy in the industrial revolution and modern economic growth},
  url          = {http://dx.doi.org/10.5547/01956574.33.3.5},
  volume       = {33},
  year         = {2012},
}