Energy and aggregate production functions: historical and methodological perspectives.

Summary From a historical and methodological perspective, this paper focuses on empirical work on energy based on the aggregate production function from the early 1970s to the late 2000s. It first discusses the standard neoclassical approach, and in particular the controversy over the substitutability between capital and energy. He then discusses the thermodynamic approach, which is more oriented towards explaining long-term growth. He shows a continuity in the methodological issues raised by this work. At the theoretical level, the aggregate production function offers little conceptual support for the physical aspects of the production process. At the empirical level, the results of the estimations of production functions with energy raise questions. In the neoclassical framework, the estimation is carried out indirectly via the cost function, so that the result is overdetermined by the assumption of marginal productivity wages. The thermodynamic approach, on the other hand, uses direct estimation, which encounters no less important statistical problems. If these difficulties concern the aggregate production function in a more general way, the energy question reveals them in a very striking way.