Working Paper: NBER ID: w18236
Authors: Juan Moreno Cruz; M. Scott Taylor
Abstract: The purpose of this paper is to introduce the concept of power density [Watts/m²] into economics. By introducing an explicit spatial structure into a simple general equilibrium model we are able to show how the power density of available energy resources determines the extent of energy exploitation, the density of urban agglomerations, and the peak level of income per capita. Using a simple Malthusian model to sort population across geographic space we demonstrate how the density of available energy supplies creates density in energy demands by agglomerating economic activity. We label this result the density-creates-density hypothesis and evaluate it using data from pre and post fossil-fuel England from 1086 to 1801.
Keywords: power density; energy exploitation; urban agglomeration; green economies; Malthusian model
JEL Codes: N0; Q4; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| density of available energy resources (Q40) | energy exploitation levels (Q40) |
| density of available energy resources (Q40) | urban agglomeration density (R11) |
| energy exploitation levels (Q40) | urban agglomeration density (R11) |
| energy exploitation levels (Q40) | income per capita (D31) |
| urban agglomeration density (R11) | income per capita (D31) |
| density of available energy resources (Q40) | energy supply (Q41) |
| energy supply (Q41) | economic activity (E20) |
| economic activity (E20) | energy demand (Q41) |
| doubling energy density (L94) | eightfold increase in energy supply (Q47) |
| larger markets (D40) | lower energy prices (Q41) |
| lower energy prices (Q41) | increased efficiency in energy transportation (L94) |
| increased efficiency in energy transportation (L94) | consumption per capita (E20) |