Direct and Indirect Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach

FCN Working Paper No. 10/2017

50 Pages Posted: 16 Mar 2019

See all articles by Hendrik Schmitz

Hendrik Schmitz

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Reinhard Madlener

RWTH Aachen University

Date Written: March 2019

Abstract

We estimate direct and indirect energy rebound effects for a wide variety of goods and services in Germany. To this end, we employ a linearized approximation of the popular Almost Ideal Demand System (LAIDS) approach suggested by Deaton and Muellbauer (1980). Excluding measures of energy efficiency when estimating rebound can lead to biased results. We alleviate this shortcoming previous research has suffered from by explicitly accounting for energy efficiency in our estimations. Using data for Germany from 1970 to 2014, we find moderate direct and significant indirect rebound effects for different energy carriers across four model specifications. Income rebound effects are counterbalanced by significant negative substitution effects, which in some cases even lead to negative overall rebound estimates.

Keywords: Rebound Effects, Germany, LAIDS, Energy Efficiency

JEL Classification: D12, Q41

Suggested Citation

Schmitz, Hendrik and Madlener, Reinhard, Direct and Indirect Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach (March 2019). FCN Working Paper No. 10/2017. Available at SSRN: https://ssrn.com/abstract=3098700 or http://dx.doi.org/10.2139/ssrn.3098700

Hendrik Schmitz (Contact Author)

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany
+49 241 80 49834 (Phone)
+49 241 80 49829 (Fax)

HOME PAGE: http://www.fcn.eonerc.rwth-aachen.de/cms/~dndh/E-ON-ERC-FCN/

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustra├če 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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