Salle 3001

Thibaud HENNET (CREST) “The macroeconomic transmission of electricity supply and demand shocks”

Abstract: : The 2021 energy crisis reignited inflation in Europe and exposed the fragility of its energy supply, with electricity prices tripling or quadrupling in several countries within a year. Using detailed supply and demand curve data from the Spanish electricity market, this paper identifies exogenous natural shocks and shows that conventional supply and demand shifters often contain cross-components that hinder identification. I construct synthetic instruments that outperform standard approaches in estimating price elasticities. These identified shocks are then employed in a proxy-SVAR to assess their transmission to inflation and industrial production. Finally, two applications are examined : the Iberian exception, which reduced inflation by about 3 percentage points, and a counterfactual increase in wind capacity, which points to amplified macroeconomic fluctuations with greater renewable integration

Organizer : Suzanne BELLUE