-0.86, and own-price elasticity of materials demand varies between -0.22 and -0.46. These results fall within the range of magnitudes of elasticities surveyed in Barker et al. (1995) and the estimates from several recent studies on energy demand in the OECD manufacturing sector.<sup>26</sup> The vintage capital model and the dynamic factor demand model yield comparable estimates for labor and materials demand, and different estimates for energy demand. The estimated elasticities of energy demand based on the vintage capital model are higher for the electrical industry, and smaller for the petrochemical, metals, and food processing industries. The estimated elasticities of energy demand for the pulp and paper industry are of comparable magnitudes across the two models.

Table 2: Cross-Price and Partial Elasticities of Energy Demand in OECD Manufacturing Sectors

|Sector|_ηe_|_l_|_ηe_|_m_|_ηe_|_K_||_ηeY_|
|---|---|---|---|---|---|---|---|---|
||VCM|P-R|VCM|P-R|VCM|P-R|VCM|P-R|
|Chemical, Rubber, Plastics and Fuel Products|0.08|0.26<sup>_∗∗∗_</sup>|-0.31|-0.20|0.14|0.12|1.03<sup>_∗∗∗_</sup>|1.21<sup>_∗∗∗_</sup>|
||(0.18)|(0.08)|(0.93)|(0.79)|(0.28)|(0.43)|(0.27)|(0.24)|
|Electrical and Optical Equipment|0.15|0.21<sup>_∗_</sup>|1.43<sup>_∗∗∗_</sup>|0.48<sup>_∗∗∗_</sup>|0.53|0.17|0.55<sup>_∗∗_</sup>|0.81<sup>_∗∗∗_</sup>|
||(0.15)|(0.12)|(0.46)|(0.10)|(0.39)|(0.29)|(0.27)|(0.21)|
|Food Products, Beverages, and Tobacco|0.43<sup>_∗∗∗_</sup>|0.31<sup>_∗∗∗_</sup>|0.56<sup>_∗∗∗_</sup>|0.56<sup>_∗∗∗_</sup>|-0.27|-0.29|0.42|0.65<sup>_∗∗∗_</sup>|
||(0.06)|(0.05)|(0.06)|(0.06)|(0.31)|(0.31)|(0.30)|(0.22)|
|Basic Metals and Fabricated Metal Products|0.44<sup>_∗∗∗_</sup>|0.61<sup>_∗∗∗_</sup>|0.50<sup>_∗∗∗_</sup>|0.39<sup>_∗∗∗_</sup>|-0.20|0.09|1.00<sup>_∗∗∗_</sup>|1.06<sup>_∗∗∗_</sup>|
||(0.09)|(0.13)|(0.08)|(0.11)|(0.38)|(0.38)|(0.23)|(0.23)|
|Pulp, Paper, Paper Products, Printing and Publishing|0.82<sup>_∗∗∗_</sup>|0.58<sup>_∗∗∗_</sup>|0.29<sup>_∗_</sup>|0.44<sup>_∗∗∗_</sup>|0.21|0.13|1.10<sup>_∗∗_</sup>|1.19<sup>_∗∗∗_</sup>|
||(0.26)|(0.14)|(0.17)|(0.10)|(0.42)|(0.38)|(0.43)|(0.25)|

Notes. _ηel_ , _ηem_ , _ηeK_ , and _ηeY_ denote elasticities of energy demand with respect to respectively wages, materials’ prices, capital and output. VCM: Vintage Capital Model, P-R: Pindyck and Rotemberg (1983) Model. All Elasticities are Calculated at Sample Means. Standard errors in parentheses.<sup>_∗∗∗_</sup> p _<_ 0.01,<sup>_∗∗_</sup> p _<_ 0.05,<sup>_∗_</sup> p _<_ 0.1.

Table 2 shows the estimated elasticities of energy demand with respect to real wages and materials prices, capital stock, and output. As expected, labor is a substitute for energy across all industries. Materials and energy inputs are substitutes across all industries, except for the petrochemical industry. The estimated cross-price elasticity of energy demand with respect to materials prices is negative for the petrochemical industry, implying complementarity between energy and materials, however it is not statistically significant. The estimated elasticities of energy demand with respect to change in capital stock indicate that, in the short-run, energy and capital are complements in the petrochemical, pulp and paper, and electrical industries, and are substitutes in the food

> 26Enevoldsen et al. (2007) energy demand elasticity estimates range between = 0.44 and = 0.38 for 15 industrial sectors in Norway, Denmark, and Sweden. Agnolucci (2009) estimates a price elasticity of -0.64 for the German and British industrial sectors over the period 19782004. Adeyemi and Hunt (2007) model asymmetric energy demand response for 15 OECD countries over the period 1962-2003, and find elasticities between -0.68 (price recoveries) and -0.30 (price cuts).

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