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
Date Written: March 2019
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: Suggested Citation