PT  - JOURNAL ARTICLE
AU  - Lazkano, Itziar
AU  - Pham, Linh
TI  - Can Capital-Energy Substitution Foster Economic Growth?
AID  - 10.3368/le.92.3.491
DP  - 2016 Aug 01
TA  - Land Economics
PG  - 491--514
VI  - 92
IP  - 3
4099  - http://le.uwpress.org/content/92/3/491.short
4100  - http://le.uwpress.org/content/92/3/491.full
SO  - Land Econ2016 Aug 01; 92
AB  - We study the ease of substitution between energy and other production inputs over time. We first develop a growth model with energy where our general production function allows for a nonconstant elasticity of substitution. Theoretical results show that the ease of substitution between capital and energy increases over time with the energy-capital ratio. Next, using country-level data from 108 countries between 1971 and 2011, we provide empirical evidence for a nonconstant elasticity of substitution between capital and energy. Our results imply that policies that increase the speed of the capital-energy substitution can foster long-run economic growth. (JEL O11, Q43)