Paper Link Han, H., Julien, B., Petursdottir, A., & Wang, L. : Equilibrium using credit or money with indivisible goods, Journal of Economic Theory, November 2016.
Paper Link Fuleky, P., and Ventura, L.: Mean Lag in General Error Correction Models, Economics Letters, June 2016
Paper Link Kirwan, B. E., & Roberts, M. J. : Who Really Benefits from Agricultural Subsidies? American Journal of Agricultural Economics, June 2016.
Date: Friday, October 28, 2016, at 3:00-4:30 pm.
Room: Saunders 515
Title: Revisiting the Energy Paradox: Do Quantity and Price of Energy Efficient Appliances Respond to Changes in Energy Prices and Interest Rates?
Speaker: Hyun-gyu Kim
Institution: University of Hawaii at Manoa
The notion of an energy efficiency gap posits that people under-invest in energy efficiency, since the present value of savings from more energy-efficient appliances, cars and other energy-consuming durable goods tends to far exceed their additional up-front cost. A considerable literature demonstrates this gap, and it has been a key factor underpinning energy-efficiency regulations. Critics contend that evidence backing an energy efficiency gap is mainly cross-sectional, and may be confounded by unobserved attributes of durable goods that are associated with energy efficiency. Taking an approach somewhat similar to recent work by Alcott and Wozny (2014), we use data on prices and sales of individual models of refrigerator, clothes washers, dishwashers and room air conditioners to revisit the question of whether an energy efficiency gap exists and how large it may be. Specifically, we consider whether changes in interest rates and electricity prices, which can significantly influence present value of more efficient versus less efficient appliances, affect changes in sales and relative prices of more versus less efficient appliances. Model fixed effects control for unobserved attributes. We find that lower interest rates and higher electricity prices have driven sharp increases in sales of more energy efficient appliances, but that these changes tend to drive prices for more energy efficient appliances down, not up. The results suggest persistence of a very large energy efficiency gap. The results also suggest that economies of scale and imperfect competition likely complicate cost-benefit analysis of energy standards and other efficiency-related policies.