TY - JOUR

T1 - Energy Distribution and Economic Growth

AU - Dalgaard, Carl-Johan Lars

AU - Strulik, Holger

N1 - JEL classification: O11, O13, Q43

PY - 2011

Y1 - 2011

N2 - This research examines the physical constraints on the growth process. In order to run, maintain and build capital energy is required to be distributed to geographically dispersed sites where investments are deemed profitable. We capture this aspect of physical reality by a network theory of electricity distribution. The model leads to a supply relation according to which feasible electricity consumption per capita rises with the size of the economy, as measured by capital per capita. Specifically, the relation is a simple power law with an exponent assigned to capital that is bounded between 1/2 and 3/4, depending on the efficiency of the network. Together with an energy conservation equation, capturing instantaneous aggregate demand for electricity, we are able to provide a metabolic-energetic founded law of motion for capital per capita that is mathematically isomorphic to the one emanating from the Solow growth model. Using data for the 50 US states 1960–2000, we examine the determination of growth in electricity consumption per capita and test the model structurally. The model fits the data well. The exponent in the power law connecting capital and electricity is 2/3.

AB - This research examines the physical constraints on the growth process. In order to run, maintain and build capital energy is required to be distributed to geographically dispersed sites where investments are deemed profitable. We capture this aspect of physical reality by a network theory of electricity distribution. The model leads to a supply relation according to which feasible electricity consumption per capita rises with the size of the economy, as measured by capital per capita. Specifically, the relation is a simple power law with an exponent assigned to capital that is bounded between 1/2 and 3/4, depending on the efficiency of the network. Together with an energy conservation equation, capturing instantaneous aggregate demand for electricity, we are able to provide a metabolic-energetic founded law of motion for capital per capita that is mathematically isomorphic to the one emanating from the Solow growth model. Using data for the 50 US states 1960–2000, we examine the determination of growth in electricity consumption per capita and test the model structurally. The model fits the data well. The exponent in the power law connecting capital and electricity is 2/3.

U2 - 10.1016/j.reseneeco.2011.04.004

DO - 10.1016/j.reseneeco.2011.04.004

M3 - Journal article

VL - 33

SP - 782

EP - 797

JO - Resource and Energy Economics

JF - Resource and Energy Economics

SN - 0928-7655

IS - 4

ER -