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Carey King Research Newsletter - October 2016:
Assumptions and Structure of Economy as related to Energy 




Two items for this newsletter:

FIRST is a 2-Part blog I wrote for the Cynthia and George Mitchell Foundation where I discuss the economic assumption of "total factor productivity" and how we can improve upon it by thinking about how energy and technology interact with the economy.

SECOND is a summary (and link to unformatted version) of my latest accepted journal publication that explores how the structure of the U.S. economy changed over time as a function of the expenditures (or costs) incurred by the core food, energy, and water sectors of the economy.



 

New blog for Cynthia and George Mitchell Foundation's blogging initiative "The Economic Argument for Environmental Protection"   


Part 1 of 2: Macro and Climate Economics: It’s time to Talk about the “Elephant in the Room” 

If we want to maximize our ability to achieve future energy, climate, and economic goals, we must start to use improved economic modeling concepts. There is a very real tradeoff of the rate at which we address climate change and the amount of economic growth we experience during the transition to a low-carbon economy. 

If we ignore this tradeoff, as do most of the economic models, then we risk politicians and citizens revolting against the energy transition midway through.

Link to full blog post here ...

 

Part 2 of 2: The Most Important and Misleading Assumption in the World 

Economic models are coupled to models of the Earth’s natural systems as Integrated Assessment Models (IAMs) that are used to inform climate change policy. Most IAM results presented in the Intergovernmental Panel on Climate Change (IPCC) reports show climate mitigation costs as trivial compared to gains in economic growth.

The referred to “elephant in the room” (from part one of this series) is the fact that economic growth is usually simply assumed to occur.

Link to full blog post here ...


 

New paper: Information Theory to Assess Relations between Energy and Structure of the U.S. Economy Over Time 

This, my most recent publication, has been accepted to Biophysical Economics and Resource Quality, a new journal from Springer.

Download paper at this link or see my publications page.

This paper describes the changing structure of the United States’ (U.S.) domestic economy by applying information theory-based metrics to the U.S. input-output (I-O) tables from 1947 to 2012. The findings of this paper have important implications for economic modeling in that the paper helps explain how fundamental shifts in resources costs relate to economic structure and economic growth.

The results of this paper show that increasing gross power consumption, as well as a decreasing share of intermediate expenditures of the food and energy sectors, correlate to increased distribution of money among economic sectors, and vice versa.

The information theory metrics indicate two time periods at which major structural shifts occurred. The first was between 1967 and 1972, and the second was around the turn of the 21st Century when food and energy expenditures no longer continued to decrease after 2002. In response to the the latter, it is clear that the U.S. economy did trade off structural reserves (e.g., decreasing metrics of conditional entropy, redundancy, and equality) for structural efficiency (e.g., increasing metrics of efficiency, mutual constraint, and hierarchy) after food and energy expenditures increased post-2002.


Figure 1. After 2002, when energy, food, and water sector costs increased after reaching their low point, the direction of structural change of the U.S. economy reversed trends indicating that money became increasingly concentrated in fewer types of transactions.
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Thank you very much for your time.  As always, please contact me for more information about how you can be involved in and contribute to my research program and student researchers (they need food!). 

Sincerely,

Carey W. King, Ph.D.
Research Scientist
Assistant Director, Energy Institute, The University of Texas at Austin
careyking@mail.utexas.edu, 512.471.5468, careyking.com
,  @CareyWKing

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My research takes a systems approach to describe the role of energy and energy technologies in our past and future. This approach provides the best way to both address questions about our future economy and environment as well as understand how individual technologies can and cannot affect the macro-scale and long-run trends that will frame our future options. I seek understanding of the relationships among:
  • energy resources and technologies,
  • population demographics,
  • water and food,
  • macroeconomic factors, and 
  • implications of internalizing environmental externalities.

 

To learn more about Carey's research, visit his website or contact him using this information:
e: careyking@mail.utexas.edu      |  web: careyking.com    |     ph: +1 512-471-5468    |    t: @CareyWKing
The University of Texas at Austin, 2304 Whitis Ave, C2400, Austin, TX 78712-1718

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