The Need to Reintegrate the Natural Sciences with Economics

Economic Growth in the USA and Germany 1960–2013: The Underestimated Role of Energy

“…The requirement that output elasticities must be non-negative constrains these parameters, and possible factor combinations as well. With constant technology parameters, recalibrated once, in 1978, a nearly residualfree description of growth between 1960 and 1990 in the Federal Republic of Germany (FRG), the USA, and Japan was possible; the recessions due to the two oil-price shocks from 1973 to 1975 and 1979 to 1981 were well reproduced (Hall et al 2001). Modeling continuous temporal changes of the technology parameters by, e.g., logistic functions, improved the agreement between theoretical and empirical growth (Kümmel et al 2002) and even allowed to describe economic growth in Germany between 1960 and 2000, including the reunification of Eastern and Western Germany in 1990 (Kümmel 2011).…”

Thermodynamic laws, economic methods and the productive power of energy

“…We do emphasize, however, that -because of the coupling of energy conversion to entropy production -an increasing need of energy for economic growth accelerates the approach to these limits. Because of the indicated engineering and environmental reasons the physical laws on energy and entropy must be incorporated into economic models [11].…”

“…Various methods have been used in order to determine the parameters a, c and y 0 [11,20,27]. Already the simplest case of fitting the Linex function with three constant parameters to the empirical time series of output reproduces the general trend of economic growth, and one obtains output elasticities for capital, labor and energy that are of the same order of magnitude as the ones in Table 2.…”

“…The statistical quality measures R 2 and d W show that there are only marginal deviations of the theoretical growth curves from the empirical ones. 12 We note that improving the modeling of the explicit ("creativity-induced") time dependence of the Linex production function by Taylor series and/or logistics for the technology parameters a(t) and c(t) does not change the findings from less sophisticated fitting procedures [11], [20,27], [48]: the output elasticity of energy is much larger than its small cost share of roughly 5 percent. Cointegration analysis of output, capital, labor, and energy [49] confirms the output elasticities of k, l, e in Table 2.…”

Service Production Functions

“…6 Ayres (2001), Ayres and Warr (2001), Beaudreau (1998), Hall et al (2001), Kümmel et al (1985Kümmel et al ( , 2000Kümmel et al ( , 2002, Lindenberger (2000), and Lindenberger et al (2001).…”