Dynamic energy-demand models: a comparison

This paper compares two second-generation dynamic energy demand models, a t ranslog (TL) and a general Leontief (GL), in the study of price elasticitie s and factor substitutions of nine Swedish manufacturing industries: food, textiles, wood, paper, printing, chemicals, non-metallic minerals, base met als and machinery. Several model specifications are tested with likelihood ratio test. There is a disagreement on short-run adjustments: the TL model accepts putty-putty production technology of immediate adjustments, implyin g equal short- and long-run price elasticities of factors, while the GL mod el rejects immediate adjustments, giving out short-run elasticities quite d ifferent from the long-run. The two models also disagree in substitutabilit y in many cases. (C) 2000 Elsevier Science B.V. All rights reserved. JEL cl assifications: D21; D24; D29.