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The effects of electricity and fuel prices on Swedish industry: A panel VAR approach

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Listed:
  • Lindström, Hanna
  • Lundgren, Tommy
  • Vesterberg, Mattias

Abstract

In this paper, we empirically examine the dynamic effects of electricity and fuel price changes on factor demand, utilizing detailed firm-level data from the Swedish manufacturing industry spanning 2004–2022. We employ a panel vector autoregressive model to analyze factor inputs and their associated prices. Our findings indicate that the demand for electricity and fuel is inelastic both immediately following a price change and over the following five years. Additionally, our results show that energy price shocks generally do not have statistically significant effects on labor demand, nor do they indicate any significant inter-fuel substitution.

Suggested Citation

  • Lindström, Hanna & Lundgren, Tommy & Vesterberg, Mattias, 2025. "The effects of electricity and fuel prices on Swedish industry: A panel VAR approach," Energy Economics, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:eneeco:v:152:y:2025:i:c:s0140988325008552
    DOI: 10.1016/j.eneco.2025.109025
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    Keywords

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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