Effect of Feed-In Tariff with Deregulation on Directed Technical Change in the Energy Sector

In this study, we examine how a feed-in tariff (FIT) accompanied with deregulation in the energy sector affects the direction of technical change along the balanced growth path. A final good is composed of resource-saving (such as renewable) energy and traditional resource-intensive energy. The government introduces a FIT scheme for promoting resource-saving energy, while it deregulates the traditional energy sector for efficiency improvement. The implementation of the scheme positively affects directed technical change toward the resource-saving energy technology and economic growth. Meanwhile, the biased technical change leads to an upsurge in the surcharge. Associated deregulation not only accelerates the biased technical change but also drives the surge in the surcharge rate, unless the initial market structure of the traditional energy sector is highly concentrated.

Directed Technical Change in Labor and Environmental Economics

It is increasingly evident that the direction of technological change responds to economic incentives. We review the literature on directed technical change in the context of environmental economics and labor economics, and we show that these fields have much in common both theoretically and empirically. We emphasize the importance of a balanced growth path and show that the lack of such a path is closely related to the slow development of green technologies in environmental economics and to growing inequality in labor economics. We discuss whether the direction of innovation is efficient. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

COVID-19 Shifted Patent Applications toward Technologies That Support Working from Home

We examine the text content of US patent applications, identifying those that advance technologies in support of video conferencing, telecommuting, remote interactivity, and working from home (collectively, WFH). The share of new patent applications that advance WFH technologies more than doubles from January to September of 2020, greatly surpassing its previous peak and following an upward trajectory since the onset of the pandemic. This evidence suggests that (re)directed technical change in reaction to COVID-19 will raise the quality and efficiency of remote work, thereby reinforcing a shift to working from home even after the pandemic ends.

Energy Mix, Financial Development and Carbon Emissions in China: A Directed Technical Change Perspective

Based on a two-sector (clean energy and dirty energy) model of directed technical change, we examine the relationship between carbon emissions, clean energy consumption and financial development in China using the ARDL method. Clean energy consumption reduces carbon emissions effectively but the effect of financial development is opposite, suggesting that financial development increases carbon emissions, contradicting the findings of many existing studies. Then, we decompose financial sector development on carbon emissions into two different effects: the substitution and income effects. The substitution effect reflects more dirty energy consumption as a result of directed technical change promoted by financial development, leading to more carbon emissions. In contrast, the income effect results in a decline of carbon emissions because financial development enables firms to use more clean energy. The empirical results indicate that the net effect of financial development has caused more carbon emissions. The policy implication is also discussed.JEL: Q01, Q42, Q56