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Macroeconomic impact of electric power outage: simulation results from a CGE modelling experiment for Hungary

Author

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  • Klára Major
  • Drucker, Luca Flóra

Abstract

This paper presents the results of a CGE application that is used to measure and understand how sectoral shocks might influence the Hungarian economy, its economic agents and its different industries. The electricity outages are modelled by the decrease in the supply of energy. A 62 sectoral CGE model has been calibrated for the Hungarian economy. The capital stock of the energy industry is shocked, which has led to a decrease in the supply of energy. It is assumed that energy is a close complement to other goods both in production and consumption. In the base scenario a 2.08% decline in the supply of energy leads to a 0.53% decline in the GDP. Without price rigidities and other frictions, the adjustment is mainly driven by agents who can react at the lowest price. Therefore, this estimation should be considered as a lower bound on the real costs of adjustment. It is also shown that if prices are distorted, the costs of an outage are higher.

Suggested Citation

  • Klára Major & Drucker, Luca Flóra, 2016. "Macroeconomic impact of electric power outage: simulation results from a CGE modelling experiment for Hungary," EcoMod2016 9580, EcoMod.
    • Handle: RePEc:ekd:009007:9580
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    File URL: http://ecomod.net/system/files/hetfa_cge_ver1.2_electricityoutage.pdf
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    Keywords

    Hungary; Impact and scenario analysis; General equilibrium modeling (CGE);
    All these keywords.

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