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On the short-term macroeconomic impacts of data centers entry in an undersized electricity market

Author

Listed:
  • Omar Chisari
  • Antonio Estache
  • Juan Ignacio Mercatante

Abstract

This paper analyses the potential transitional direct and indirect macroeconomic impacts of an electricity price increase due to the entry of new large data centers in an economy without excess energy capacity. It tracks the short term distributional, employment, fiscal, sectoral and growth effects of the associated electricity demand shock, if the prevailing electricity price regulation remains unchanged. The quantitative analysis is based on a computable general equilibrium model calibrated for Argentina. The simulations suggest that the failure to adjust the pricing regulation could lead to a short run output drop in the industrial and service sectors. This would increase unemployment and worsen income distribution since the shock hurts less the highest income class in relative terms.

Suggested Citation

  • Omar Chisari & Antonio Estache & Juan Ignacio Mercatante, 2026. "On the short-term macroeconomic impacts of data centers entry in an undersized electricity market," Working Papers ECARES 2026-25, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/411995
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    Keywords

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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E16 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Social Accounting Matrix
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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