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The macroeconomic impacts of reducing energy use What lies beyond orthodox growth models? Lukas Bunse, University of Leeds International Exergy Economics Workshop, 14/07/2016 www.see.leeds.ac.uk/people/l.bunse 1/13 Outline • Background of my PhD • Results of my literature review • Ideas and questions to take forward 2/13 Background • In 30 years we will use less energy than now • How to get there without making a mess of it? • Two stories: decoupling vs. economic decline 3/13 Literature review question • Why do different researchers reach so different conclusions on the possibility of decoupling energy use from economic growth? 4/13 My answer … • Orthodox growth theory • … and the distinction between the short-term and the long-term 5/13 Example of peak oil Orthodox paradigm Oil shock GDP Equilibrium Growth Trend = Production function + factor inputs + technical progress Time 6/13 Example of peak oil Alternative Paradigm High oil prices Higher oil demand Recession Economic growth Lower oil demand Dynamic limits to growth 7/13 Low oil prices Adapted from Murphy & Hall 2011 Tug of war model (orthodox) Economic growth Energy Transmission belt model (alternative) Economic growth Energy 8/13 https://commons.wikimedia.org/wiki/Tug_of_war#/medi a/File:Tug_of_war_pictogram.svg Problems with orthodox theory • Possibility of decoupling often built in by assumption • Growth trend is often exogenous • Abstracts from complex dynamics 9/13 Moving forward • How to conduct research under alternative, non-equilibrium paradigm ? • How to go beyond aggregate production functions? • What are alternative paradigms? 10/13 Looking for inspiration … • Heterodox schools of economic thought • Post-Keynesian economics • Evolutionary economics • Ecological Macroeconomics 11/13 Specific questions? 1) Case studies of decoupling. Are they sustainable? 2) How do effects of energy price shocks vary over different time scales? 3) What is the relationship between energy and labour productivity growth? 12/13 Thanks for listening! Questions or ideas? 13/13 Reference(s) Murphy, D. J., & Hall, C. A. S. (2011). Energy return on investment, peak oil, and the end of economic growth. Annals of the New York Academy of Sciences, 1219, 52–72 14/13
