Energy price shocks, input price changes, and developmental implications: A translog model applied to Puerto Rico

Publisher Website
Google Scholar
Abstract
The energy shocks of the 1970s that altered the relative price relationships between factor inputs and induced structural changes are analysed with the use of a translogarithmic cost function that incorporates the inputs capital, labour, and energy. The developmental implications of these structural changes on a small, open, and energy/capital importing region are emphasized, taking the case of Puerto Rico as an example. In terms of the partial elasticities of substitution, the capital‐labour relationship moved from highly substitutable in the pre‐1973 period to weakly complementary thereafter. The energy‐labour association was transformed from high to low substitutability, and that of energy‐capital from highly complementary to substitute.

This publication has 6 references indexed in Scilit: