Swiss Journal of Economics and Statistics

, Volume 148, Issue 2, pp 137–166 | Cite as

Sectoral Growth Effects of Energy Policies in an Increasing-Varieties Model of the Swiss Economy

Open Access


The paper applies a theoretical model with increasing capital varieties to study the impact of energy on growth. It translates a multisectoral framework version to a computable general equilibrium (CGE) model of the Swiss economy. We study the impacts of a policy aiming at enabling the economy to reach the longterm target of a 2000-Watt-society, implying a substantial reduction of the energy input in the future. We find that (i) the aggregate effects of an ambitious energy efficiency policy turn out to be moderate, (ii) all sectors in the economy continue to grow at robust positive rates (although growth rates decrease in some sectors compared to business-as-usual), and (iii) some industries experience substantially higher growth under regulation. We focus on the different sectoral growth effects to simulate future structural change.


Energy and Growth CGE model sectoral growth rates Swiss data 


Q54 C63 O41 Q43 


  1. Armington, Paul S. (1969), “A Theory of Demand for Products Distinguished by Place of Production”, Staff Papers – International Monetary Fund 16, pp. 159–178.CrossRefGoogle Scholar
  2. Bosetti, Valentina, Carlo Carraro, and Marzio Galeotti (2006), “The Dynamics of Carbon and Energy Intensity in a Model of Endogenous Technical Change”, The Energy Journal, Endogenous Technological Change and the Economics of Atmospheric Stabilisation Special Issue, pp. 191–206.Google Scholar
  3. Bretschger, Lucas (1998), “How to Substitute in Order to Sustain: Knowledge Driven Growth under Environmental Restrictions”, Environment and Development Economics 3(4), pp. 425–442.CrossRefGoogle Scholar
  4. Bretschger, Lucas, Roger Ramer, and Florentine Schwark (2011), “Growth Effects of Carbon Policies: Applying a Fully Dynamic CGE Model with Heterogeneous Capital”, Resource and Energy Economics 33 (4), pp. 963–980.CrossRefGoogle Scholar
  5. Bretschger, Lucas, Roger Ramer, and Florentine Schwark (2010), “Impact of Energy Conservation Policy Measures on Innovation, Investment and Long-Term Development of the Swiss Economy: Results from the Computable Induced Technical Change and Energy (CITE) Model”, Final report for EWG project 101844, prepared for the Swiss Federal Office of Energy, Bern, Switzerland.Google Scholar
  6. Bundesamt für Energie (2006), Schweizerische Gesamtenergiestatistik 2005, Bern.Google Scholar
  7. Buonanno, Paolo, Carlo Carraro, and Marzio Galeotti (2003), “Endogenous Induced Technical Change and the Costs of Kyoto”, Resource and Energy Economics 25, pp. 11–34.CrossRefGoogle Scholar
  8. Dixit, Avinash K. and Joseph E. Stiglitz (1977), “Monopolistic Competition and Optimum Product Diversity”, The American Economic Review 67 (3), pp. 297–308.Google Scholar
  9. Ecoplan (2007a), „Die Energieperspektiven 2035 — Band 3. Volkswirtschaftliche Auswirkungen. Ergebnisse des dynamischen Gleichgewichtsmodells, mit Anhang über die externen Kosten des Energiesektors“, Bern.Google Scholar
  10. Ecoplan (2007b), „Auswirkungen langfristig hoher Ölpreise. Einfluss eines hohen langfristigen Ölpreises auf Wirtschaftswachstum, Strukturwandel sowie Energieangebot und -nachfrage“, Bern.Google Scholar
  11. Ecoplan (2009), „Volkswirtschaftliche Auswirkungen der Schweizer Post-Kyoto Politik. Analyse mit einem Gleichgewichtsmodell für die Schweiz“, Bern.Google Scholar
  12. Edenhofer, Ottmar, Nico Bauer, and Elmar Kriegler (2005), “The Impact of Technological Change on Climate Protection and Welfare: Insights from the Model MIND”, Ecological Economics 54, pp. 277–292.CrossRefGoogle Scholar
  13. Ethier, Wilfried J. (1982), “National and International Returns to Scale in the Modern Theory of International Trade”, The American Economic Review 72 (3), pp. 389–405.Google Scholar
  14. Goulder, Lawrence H. and Stephen H. Schneider (1999), “Induced Technological Change and the Attractiveness of CO2 Abatement Policies”, Resource and Energy Economics 21, pp. 211–253.CrossRefGoogle Scholar
  15. Grossman, Gene M. and Elhanan Helpman (1991), Innovation and Growth, The MIT Press, Cambridge, USA.Google Scholar
  16. Hasanov, Fuad (2007), “Housing, Household Portfolio, and Intertemporal Elasticity of Substitution: Evidence from the Consumer Expenditure Survey”, EconWPA, Macroeconomics 0510011.Google Scholar
  17. Heggedal, Tom-Reiel and Karl Jacobsen (2011), “Timing of Innovation Policies when Carbon Emissions are Restricted: An Applied General Equilibrium Analysis”, Resource and Energy Economics, 33 (4), pp. 913–937.CrossRefGoogle Scholar
  18. Jochem, Eberhard et al. (2004), “Steps Towards a Sustainable Development. a White Book for R&D of Energy-Efficient Technologies”, CEPE/ETH Zurich and Novatlantis, Zurich.Google Scholar
  19. Kemfert, Claudia (1998), “Estimated Substitution Elasticities of a Nested CES Production Function Approach for Germany”, Energy Economics 20, pp. 249–264.CrossRefGoogle Scholar
  20. Nathani, Carsten, Marcel Wickart, and Renger van Nieuwkoop (2008), „Revision der IOT 2001 und Schätzung einer IOT 2005 für die Schweiz“, Centre for Energy Policy and Economics (CEPE), ETH Zuerich; Ecoplan, Forschung und Beratung in Wirtschaft und Politik; Rütter + Partner, Zürich / Bern / Rüschlikon.Google Scholar
  21. Nordhaus, William D. (2002), “Modeling Induced Innovation in Climate Change Policy”, in Arnulf Grübler, Nebjosa Nakicenovic and William D. Nordhaus (2002), Modeling Induced Innovation in Climate Change Policy, Resources for the Future Press.Google Scholar
  22. Okagawa, Azusa and Kanemi Ban (2008), “Estimation of Substitution Elasticities for CGE models”, Graduate School of Economics and Osaka School of International Public Policy, Discussion Paper 08–16.Google Scholar
  23. Otto, Vincent M., Andreas Löschel, and Rob Delink (2007), “Energy Biased Technical Change: A CGE Analysis”, Resource and Energy Economics 29 (2), pp. 137–158.CrossRefGoogle Scholar
  24. Paltsev, Sergey (2004), “Moving from Static to Dynamic General Equilibrium Economic Models (Notes for a Beginner in MPSGE)”, Technical Note No. 4, MIT Joint Program on the Science and Policy of Global Change.Google Scholar
  25. Pittel, Karen and Lucas Bretschger (2010), “The Implications of Heterogeneous Resource Intensities on Technical Change and Growth”, Canadian Journal of Economics 43 (4), pp. 1173–1197.CrossRefGoogle Scholar
  26. Prognos (2007), “Die Energieperspektiven 2035 — Band 2. Szenarien I bis IV”, Bern.Google Scholar
  27. Romer, Paul M. (1990), “Endogenous Technological Change”, The Journal of Political Economy 98 (5), pp. 71–102.CrossRefGoogle Scholar
  28. Sceia, André, Philippe Thalmann, and Marc Vielle (2009), “Assessment of the Economic Impacts of the Revision of the Swiss CO2 Law with a Hybrid Model”, REME-REPORT-2009-002.Google Scholar
  29. Smulders, Sjak and Michiel de Nooij (2003), “The Impact of Energy Conservation on Technology and Economic Growth”, Resource and Energy Economics 25 (1), pp. 59–79.CrossRefGoogle Scholar
  30. Spence, Michael (1976), “Product Selection, Fixed Costs, and Monopolistic Competition”, Review of Economic Studies 43, pp. 217–235.CrossRefGoogle Scholar
  31. Stern, Nicolas (2007), “The Stern Review Report: The Economics of Climate Change”, Cambridge University Press, Cambridge.CrossRefGoogle Scholar
  32. Sue Wing, Ian (2003), “Induced Technical Change and the Cost of Climate Policy”, MIT Joint Program on the Science and Policy of Global Change, Report No. 102.Google Scholar
  33. van der Werf, Edwin (2007), “Production Functions for Climate Policy Modeling: An Empirical Analysis”, Energy Economics 30, pp. 2964–2979.CrossRefGoogle Scholar
  34. Xepapadeas, Anastasios, and Aart de Zeeuw (1999), “Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital”, Journal of Environmental Economics and Management 37, pp. 165–182.CrossRefGoogle Scholar

Copyright information

© Swiss Society of Economics and Statistics 2012

Authors and Affiliations

  1. 1.CER-ETH Center of Economic Research at ETH ZurichZurichSwitzerland
  2. 2.CER-ETH Center of Economic Research at ETH ZurichSwitzerland

Personalised recommendations