| This dissertation project involves the construction and application of a large-scale simulation model designed to assess the effects of changing energy conditions and policies on the U.S. economy. The simulation model differs from most other applied energy models in combining a fully integrated, general equilibrium treatment of energy and non-energy markets with a significant amount of industry and consumer detail.;The model represents the taxation, expenditure and production roles of government in detail. Foreign trade in goods as well as international capital flows are modelled; special attention is given to the investment in the U.S. of surplus revenues enjoyed by the oil exporting countries.;With this structure the model simulates energy-economy interactions over the period 1973-2001. It examines quantitatively the departures from steady-state growth induced by rising energy prices, the economic consequences of limitations in firms' abilities to adopt superior production techniques as relative prices change, and the economic implications of changes in the way the oil exporting countries invest their surplus revenues.;A number of energy policies are also analyzed in terms of their impacts on economic growth, the composition of output, and the level and distribution of consumer welfare. A windfall profits tax is shown to have generally favorable effects on savings and investment and to benefit capital owners. An oil tariff of six dollars per barrel does not emerge as a worthwhile policy unless substantial weight is attached to the national security benefits of tariff-induced reductions in oil import quantities.;The economic equilibria described by the model result from the interaction of consumers, producers, the government and the foreign sector. The model identifies twelve household groups according to income, and determines the behavior of each group according to homothetic utility functions defined over leisure, present consumption and future consumption. The model divides U.S. industry into five energy and four non-energy sectors. Translog cost functions are specified for each sector; duality results are applied to determine optimal input intensities of primary factors and intermediate goods as functions of their relative prices. Some of the dynamics of producer behavior are captured by representing firms as being capable of adjusting to newly desired production techniques only over time. Supply limitations are imposed on the domestic production of crude petroleum and natural gas. |
