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Energies 2017, 10(2), 202; doi:10.3390/en10020202

Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation

1
Sustainability Research Institute, School of Earth and Environment, University of Leeds, Leeds LS2 9JT, UK
2
Engineering Department, Calvin College, Grand Rapids, MI 49546, USA
3
MARETEC—Marine, Environment, and Technology Center, Environment and Energy Scientific Area, Department of Mechanical Engineering, Instituto Superior Técnico (IST), University of Lisbon, Avenida Rovisco Pais, 1 1049-001 Lisbon, Portugal
*
Author to whom correspondence should be addressed.
Received: 18 November 2016 / Accepted: 4 February 2017 / Published: 10 February 2017
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Abstract

Capital–labour–energy Constant Elasticity of Substitution (CES) production functions and their estimated parameters now form a key part of energy–economy models which inform energy and emissions policy. However, the collation and guidance as to the specification and estimation choices involved with such energy-extended CES functions is disparate. This risks poorly specified and estimated CES functions, with knock-on implications for downstream energy–economic models and climate policy. In response, as a first step, this paper assembles in one place the major considerations involved in the empirical estimation of these CES functions. Discussions of the choices and their implications lead to recommendations for CES empiricists. The extensive bibliography allows those interested to dig deeper into any aspect of the CES parameter estimation process. View Full-Text
Keywords: CES production function; econometrics; estimation; elasticity of substitution; energy policy; energy CES production function; econometrics; estimation; elasticity of substitution; energy policy; energy
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Brockway, P.E.; Heun, M.K.; Santos, J.; Barrett, J.R. Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation. Energies 2017, 10, 202.

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