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

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.

Keywords

Factor demand; Climate policy; Employment; Manufacturing

Published in

Energy Economics
2025, volume: 152, article number: 109025
Publisher: ELSEVIER

SLU Authors

• Lundgren, Tommy

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    
  • Centre for Environmental and Resource Economics (CERE)

UKÄ Subject classification

Economics

Publication identifier

• DOI: https://doi.org/10.1016/j.eneco.2025.109025

Permanent link to this page (URI)

https://res.slu.se/id/publ/144874