Publications

Journal Article

Energy plays no role in the standard Cobb-Douglas Production Function (CDPF), and a trivial role in a three-factor CDPF where it is treated as a third input, independent of labour and capital.

Starting from an epistemological perspective, the authors treat energy as an input to both labour and capital, without which production is impossible.

The authors then derive an energy-based CPDF (EBCDPF) in which energy plays a critical role. The authors argue for the redefinition and measurement of real GDP in terms of exergy.

The authors conclude that the “Solow Residual” measures the contribution of exergy to growth, and that the exponents in the EBCDPF should be based on cross-country comparative data as suggested by Mankiw (1995) rather than the “cost-share theorem”.