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Energy import costs in a flexible input-output price model

  • Identification data

    Identifier: imarina:6127498
    Handle: https://hdl.handle.net/20.500.11797/imarina6127498
    Authors:
    Llop M
    Abstract:
    © 2019 The Author A fundamental assumption of the input-output (IO) model is a fixed relationship between interindustry flows. In the price version of the model, the assumption of fixed-coefficients prevents the optimal mix of inputs being adjusted when relative prices change. The aim of this paper is to evaluate the role of energy import prices in the IO price model without the usual non-substitution technology inherent to the input-output structure. The analysis includes alternative substitution possibilities for the elements that comprise the sectoral costs, which are empirically implemented from an IO dataset. The various substitution scenarios are defined by three different cost structures: the Leontief, Cobb-Douglas and Constant Elasticity of Substitution (CES) functions. The empirical application to the Catalan economy illustrates the relevance of the flexibility option used for explaining the quantitative influence of energy import prices on domestic prices. Adapting the traditional input-output model to include factor substitution makes it possible to overcome the rigidity in transmitting price impacts, and illustrates a range of possible effects.

  • Others:

    Author, as appears in the article.: Llop M
    Department: Economia
    URV's Author/s: Llop Llop, Maria
    Keywords: Substitution possibilities Primary inputs Price impacts Input-output model Energy import prices
    Abstract: © 2019 The Author A fundamental assumption of the input-output (IO) model is a fixed relationship between interindustry flows. In the price version of the model, the assumption of fixed-coefficients prevents the optimal mix of inputs being adjusted when relative prices change. The aim of this paper is to evaluate the role of energy import prices in the IO price model without the usual non-substitution technology inherent to the input-output structure. The analysis includes alternative substitution possibilities for the elements that comprise the sectoral costs, which are empirically implemented from an IO dataset. The various substitution scenarios are defined by three different cost structures: the Leontief, Cobb-Douglas and Constant Elasticity of Substitution (CES) functions. The empirical application to the Catalan economy illustrates the relevance of the flexibility option used for explaining the quantitative influence of energy import prices on domestic prices. Adapting the traditional input-output model to include factor substitution makes it possible to overcome the rigidity in transmitting price impacts, and illustrates a range of possible effects.
    Thematic Areas: General o multidisciplinar Environmental studies Economics and econometrics Economics Economia Ciencias sociales
    licence for use: https://creativecommons.org/licenses/by/3.0/es/
    ISSN: 09287655
    Author's mail: maria.llop@urv.cat
    Author identifier: 0000-0001-6609-7528
    Record's date: 2023-02-19
    Papper version: info:eu-repo/semantics/publishedVersion
    Link to the original source: https://www.sciencedirect.com/science/article/pii/S092876551930123X
    Papper original source: Resource And Energy Economics. 59 (101130):
    APA: Llop M (2020). Energy import costs in a flexible input-output price model. Resource And Energy Economics, 59(101130), -. DOI: 10.1016/j.reseneeco.2019.101130
    Licence document URL: https://repositori.urv.cat/ca/proteccio-de-dades/
    Article's DOI: 10.1016/j.reseneeco.2019.101130
    Entity: Universitat Rovira i Virgili
    Journal publication year: 2020
    Publication Type: Journal Publications

  • Keywords:

    Economics,Economics and Econometrics,Environmental Studies
    Substitution possibilities
    Primary inputs
    Price impacts
    Input-output model
    Energy import prices
    General o multidisciplinar
    Environmental studies
    Economics and econometrics
    Economics
    Economia
    Ciencias sociales

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