Does oil price uncertainty affect energy use?

From: The Energy Journal | Date: January 1, 2006| Author: Kuper, Gerard H.; van Soest, Daan P. | Copyright information

Theory predicts that the presence of fixed costs implies that the relationship between energy use and energy price changes is asymmetric, as the firm's output and investment decisions respond differently to energy price increases and decreases. The asymmetry is exacerbated if future energy prices are uncertain, but to date the empirical literature does not explicitly take uncertainty into account. The contribution of this paper is twofold. First, we develop a new measure of energy p...

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