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Carey W. King Research Newsletter - End-of-year 2018:
"Researching the role of energy in our past and future using a systems approach"
Want to know how energy (and natural resources) consumption relates to wages and employment? Then watch a new video from one of my recent talks ...
Happy Holidays! Grab your favorite warm drink, and watch a new (~ 30 minute) of me explaining what most economists can't: how the economy really evolves with regard to consumption of natural resources!
For those that watched previous presentations on this topic, in this new video I describe a much more complete interpretation for how my modeling research explains the important linkage between wages and the rate of natural resource consumption.
I have posted a new video (described below) linked via my website presentations page.
Understanding the link between the economy's use of natural resources and the distribution of income between wages and profits
Most macroeconomic analyses do not fundamentally consider the role of energy and resources in the long-term dynamics of society and the economy. However, it is self-evident that natural resources are needed for three fundamental functions:
1) people consume resources, such as food, to survive and be healthy,
2) machines need natural resource inputs, such as energy, to operate, and
3) machines, buildings, and other physical capital are themselves made out of natural resources.
So what did I discuss in this presentation? I describe my economic model that considers the three core functions listed above, and I link them to macroeconomic variables of concern, such as employment, wages, profits, and debt. In doing so, we can explain why the United States share of GDP going to wages (the wage share) declined starting in the 1970s at the same time when per capita energy consumption stopped increasing.
The new presentation on energy-economic modeling:
- Title: Macroeconomic growth Model with stock-flow consistency of Money and natural resources
- This presentation was given November 18, 2018 at the Conference of the Southern Economic Association
- Introduction (0:00 - 2:30): Sets up the motivation for developing the model, and the real-world trend that the model helps explain.
- Model derivation and foundation (2:30 - 17:25)
- Interpreting the timing and sequence of economic evolution (16:37 - 27:20)
- How the model explains wage and energy consumption trends of the U.S. since 1929 (27:20 - 31:49): The model indicates there is likely a fundamental linkage between energy consumption (per person) and the share of GDP that goes to workers.
Special thanks for inspiration: This research progress owes much to my cooperation with Eric Kemp-Benedict at the Stockholm Environment Institute. Eric is a brilliant scholar with knowledge spanning physical sciences and economics. Also special thanks to:
1) Robert Ayres (retired from INSEAD) for his decades long efforts to describe how to model energy and the economy,
2) Steve Keen for pushing forward how to think of private debt in economic modeling (at Kingston University, his podcast: http://debunking.podbean.com/, his website blog: http://www.debtdeflation.com/blogs/ ), and
3) Gael Giraud (website: http://www.chair-energy-prosperity.org/en/category/research-fellows-1/gael-giraud-en/) for supporting and pursuing research in linking resources, debt, and economic outcomes via the Chair in Energy and Prosperity.
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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.
Sincerely,
Carey W. King, Ph.D.
Research Scientist, Energy Institute and Jackson School of Geosciences
Assistant Director, Energy Institute
Lecturer, McCombs School of Business & LBJ Schol of Public Affairs
The University of Texas at Austin
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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.
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