Demand for energy in manufacturing: applications of dynamic models of factor demand to U.S. and Canadian disaggregated data.

Utilizes recent advances in the specificaton of dynamic models of the demand for energy to compare short run and long run responses in manufacturing industries to energy prices shocks. Presents short run and long run own and cross-price elasticities of demand for energy, labour, materials and capital for 18 2-digit industries. Also contained in the empirical results are the speeds of adjustment between steady state equilibria. On average, it is estimated that about 1/3 of the ultimate adjustment occurs during the first year after the shock. Also explores the nature of energy/capital and energy/labour complementarity or substitutability. Disaggregation by 2-digit industrial classification reveals considerable variation in the relevant production characteristics, so no overall conclusions can be obtained. Complicating this situation is the fact that for a number of industries, switching occurs in the complementarity/substitutability relationship as firms adjust from the short run to a new long run steady state equilibrium. -Authors