Browsing by Subject "general equilibrium model"

In Finland energy requirement is high because of the cold climate and long distances. Energy is needed to ensure the welfare and an industrial life’s needs. Energy taxation, emissions trading and subventions are well known political instruments for decreasing energy consumption. Energy efficiency has become a famous policy for reducing energy consumption without lowering the quality of energy services. There have always been critics for the energy efficiency and its consequences among the researchers. It is possible to have improving energy efficiency, while still seeing rises in energy consumption. This phenomenon is known as a rebound effect. If energy consumption rises above the level it would have been without efficiency improvements the phenomena is called backfire effect. The objective of this thesis was to find out how to investigate the rebound-effect, what are the critical factors of it and present the results of the resent empirical studies. Attention has been also in finding out what energy efficiency is, how it appears in economical models and why it is an important research area. The effects of energy efficiency are difficult to allocate between different economic factors. Hence it seems that a computable general equilibrium framework is obvious tool to investigate the rebound effect in the national economy level though it’s quite complicated. The production function and the elasticity of substitution seem to be crucial for the size of the rebound effect in a computable general equilibrium framework. It was observed that when the elasticity of substitution was high, the rebound effect was also high. For this reason the form of production function is crucial, it should be one where the elasticity of substitution is not a constant. Empirical studies have established evidence of the rebound effect but its size varies with different areas, with a different elasticity of substitution and in different time periods. In some scenarios even backfire was observed. None of the cases reach total utility of the efficiency improvements.