Abstract
The energy model is based on an extension of applied general equilibrium models of the Leontief input-output type, first implemented by Hudson and Jorgenson (1974). One objective of our project is to choose specifications of sectoral production and cost functions that permit us to estimate the unknown parameters of the price functions and input demand functions from a single input-output table in ten energy and 35 non-energy industries. Our second objective is to determine the price for capital and labor as well as the components of final demand endogenously instead of using a separate growth model as an engine for the economic development. Our third objective is to combine the concept of price-dependent substitution within the input structure with the concept of vintage coefficients for the latest plants. By this we incorporate into the input-output analysis the effect on growth as a result of investment, the effect on capacity as a result of new plants, and the effect on prices as a result of new technologies. An application of the model shows the long-term impact on growth and prices under alternative technologies in the electricity industry (nuclear or coal-fired power plants).
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