Energy demand - WITCH
|Institution||European Institute on Economics and the Environment (RFF-CMCC EIEE), Italy, http://www.eiee.org.|
|Solution concept||General equilibrium (closed economy)|
The energy service demand is part of the Constant Elasticity of Substitution production function. Energy services have endogenous improvements in energy efficiency. Energy efficiency increases with investments in dedicated energy R&D, which build up the stock of knowledge. The stock of knowledge can then replace (or substitute) physical energy in the production of energy services.
The energy demand is mainly determined by the economic growth, which is calibrated from the growth rate of total factor productivity.