Conference Agenda

How is productivity affected by increasing energy prices? To answer this question we exploit a comprehensive firm dataset comprising nearly all French manufacturing firms. We find differential productivity growth biased towards energy. This finding informs our modelling strategy in the second step where we introduce factor specific productivity growth into a scale invariant growth model with endogenous market structure. Due to a continuum of steady states, the level of the equilibrium growth path is affected by energy taxes and the initial technology mix. Differential growth of factor-specific productivities offers a complementary perspective for understanding sluggish labour productivity growth.

Electrification is a key lever for decarbonization. Achieving it requires not only abundant, low-cost clean electricity, but also new technologies that can convert electricity into valuable economic services. While the Directed Technical Change (DTC) literature emphasizes that innovation responds to relative profit opportunities, these profits are shaped by market structure and competition intensity. Building a novel model of directed technical change with endogenous markups across energy generating and consuming sectors, we analyze how imperfect competition and technological linkages jointly shape the pace and direction of electrification. We show that competition effects, in particular free exit and entry of firms, can weaken lock-in effects that typically favor fossil technologies. Furthermore, the competition effects dampen the speed of transition, especially under strong climate policy. Policies that combine carbon pricing with research subsidies and competition policies that reduce fossil-sector markups can direct innovation incentives, achieving faster and more cost-effective electrification.

With the expansion in both the level and scope of carbon pricing in Europe and elsewhere, the use of carbon price revenues has become a central question in climate policy design. This paper examines a fundamental trade-off: whether to recycle revenues to reduce distortionary labor taxes—generating a static efficiency gain—or to subsidize R&D for clean technologies to lower future decarbonization costs. We first develop a general-equilibrium model with distortionary taxation and endogenous directed technical change, showing that recycling revenues into clean R&D can, in principle, generate a dynamic fiscal dividend by expanding the future tax base. We then quantify these mechanisms using a calibrated extension of the model featuring heterogeneous households and a detailled representation of energy technologies. The numerical results show that recycling revenues through labour-tax reductions delivers robust aggregate welfare gains. In contrast, channeling revenues into electricity-sector R&D improves technologies but yields lower aggregate welfare than simple lump-sum transfers. This arises from induced sectoral misallocations when subsidies are not precisely targeted toward the underlying knowledge externalities.

This paper develops a unified framework to disentangle three forces of the energy transition: (i) capital installation, where investment in newer, more efficient processes of production triggers a change in inputs ratio; (ii) Directed Disembodied Technical Change (DDTC), corresponding to pure R&D, which shifts the production frontier and allows more output to be produced with the same inputs ratio; and (iii) adjustment frictions, which constrain how much the input intensity of already-installed capital can be modified over time in response to changing relative prices. A key contribution is the introduction of a parameter, measuring adjustment frictions, that interpolates between two corner cases studied in the literature: putty-clay and putty-putty capital. Bayesian estimation on U.S. data (1949-2024) shows that the level of such adjustment frictions matters for structural parameter values: the elasticity of substitution (EoS) between emissions and capital ranges from 0.18 to 1.16. Ultimately, this matters for optimal policy: the higher the EoS, the more the emissions transition is driven by capital installation, which advocates for subsidies to capital scrapping or to investment.