A Study of the Macroeconomic Impact of Electricity Price Volatility Based on Regression Analysis

Abstract

As a basic energy source, the price fluctuation of electricity has an important impact on macroeconomic operation. This paper adopts the DSGE model combined with regression analysis to excavate the mechanism of electricity price fluctuations on the macroeconomy. The extended DSGE model is constructed to quantify the relative contribution of electricity price shocks to macroeconomic variables. Based on the VAR model, reveal the dynamic impact path of electricity price volatility on core macroeconomic indicators. The findings show that the impact of electricity price shocks on total output ranks third, accounting for 25.91%. Increasing the electricity markup from 0.2 to 0.6, the numerical simulation finds that it will lead to an increase in electricity prices. Electricity price volatility has a significant and heterogeneous impact on the macroeconomy through the channels of cost transmission and demand adjustment.