Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282562 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10874
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper asks whether increasing productivity in the electricity sector can yield larger long-run GDP gains than suggested by electricity's small share of aggregate economic activity. We answer this question using a dynamic model in which electricity is a strong complement to other inputs in production. We parameterize the model using our own new measures of electricity-sector TFP across countries. The model predicts modest long-run GDP gains from improving electricity-sector TFP, contrary to the notion that electricity is a weak link. Parameterizations that make electricity a weak link mostly require the electricity sector to be counterfactually large or unproductive.
Subjects: 
electricity
economic development
weak link
TFP
JEL: 
O40
O11
Q43
Document Type: 
Working Paper
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