The high price U.S green economy: A specific factor modeling

Abstract

The high price of energy due to the green energy policy will cause adjustments across the U.S. economy is predicted in the present computable general equilibrium with specific factors model. This includes energy input, especially electricity with capital and labor to produce manufacturing and service goods. 2022 labor, energy, and sector-specific capital input data on U.S. manufacturing, service, and agricultural sectors is applied to specific factors of the computable general equilibrium model. The model, which assumes constant returns, full employment, competitive pricing, and perfect labor mobility across industries hypothesizes a range of price changes due to project potential adjustments in factor prices and outputs. The U.S manufacturing sector is revealed to have a higher degree of noncompetitive pricing for energy factor inputs, but not on labor and capital as advocates for green energy tout by the new technology. The policy has virtually no significant impact on the service and agricultural sectors. The high price of green energy will cause an elastic decrease in all energy inputs. The output from energy-intensive manufacturing only rises in the long run by 4 % while service and agriculture fall. Clear winners are the owners of energy resources through their price-searching behavior. This includes the government, which owns a large share of hydrocarbon reserves.

Keywords

• Renewable energy
• Specific factor model
• Green energy
• Inflation reduction act