Long-run multipliers

Long-run analysis, dating back to Marshall, has been a focus of applied energy economics, mostly in the last decades. A plethora of studies centered on the connection between energy and economic growth but found no definitive results regarding causality direction and elasticity values. Recently, practitioners often model long-run relationships via Auto-Regressive Distributed Lag or Distributed Lag models. This framework simply assumes that a steady solution of a rational expectation production model exists and it is stable and unique. Furthermore, it can be extended to incorporate non-linearities via positive and negative partial sum decompositions of the explanatory variables, depicting various forms of asymmetries in the adjustment mechanism from initial shocks to short- and long-run effects.