A dynamic simulation model of the Indian economy has been developed which captures the important linkages between economic growth and the development of various forms of energy. Non-commercial forms of energy which supplied the bulk of total energy requirements of the economy so far have clearly reached their saturation limits. Capital costs for coal and petroleum increase with resource depletion. The cost of hydroelectricity increases as the cheaper and more accessible resources are exhausted. The costs of renewable energy sources such as solar, wind and biomass decrease with cumulative production due to technical progress. Such sources of energy become more important sources in the future though their current share of the total energy production is negligible. The thesis examines the dynamics of the transition to the new era as well as responses of the economy to energy shocks such as steep increases in international oil prices. It investigates the possibility of an interim crisis if the domestic energy industry is slow to develop or if the response of energy demand to rising energy prices is sluggish. Such a difficult transition may be marked by persistent import dependence, high energy prices and high outlays in the energy sectors that reduce the resources available to the non-energy sectors for consumption and growth. An aggregate production function utilizing capital, labour and energy as factor inputs has been utilized for the economy along with a neo-classical formulation for consumption and saving in the economy. The model generates the energy demand of the economy endogenously and incorporates the adaptation of energy intensity to rising real energy prices through more efficient new capital equipment as well as retrofits of inefficient equipment. The model has been calibrated using Indian data. Where parameters or assumptions are based on uncertain facts, sensitivity tests have been carried out. The effect of government policies such as taxation of energy or emphasis on conservation have been investigated.

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Date created

• 1984

Type

• Document

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• Processing documentation available at: https://wiki.albany.edu/display/SCA/Processing+Ingested+Digital+Files

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• Creative Commons BY-NC-ND Attribution-NonCommercial-NoDerivs 4.0 International

  
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6e5cbea1fd05527880f389afd8fb85d1

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Collection

System Dynamic Society Records

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• This collection is part of the University Archives