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IPFS News Link • Energy

Energy has Ten Times Bigger Role Than Cost

• arclein

According to the cost-share theorem, reductions of energy inputs by up to 7%, observed during the first energy crisis 1973?"1975, could have only caused output reductions of 0.35%, whereas the observed reductions of output in industrial economies were up to an order of magnitude larger. Thus, from this perspective the recessions of the energy crises are hard to understand. In addition, cost-share weighting of production factors has the problem of the Solow residual. The Solow residual accounts for that part of output growth that cannot be expl


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