Electricity Cost and Firm Performance: Evidence from India

• 成果类型: Article
• 署名作者: Abeberese, Ama Baafra
• 署名单位: Wellesley College
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00641
• 发表日期: 2017-12
• 页码: 839-852
• 关键词: productivity; shortages; industry; GROWTH; inputs

摘要

Using data on Indian firms, I provide evidence on how electricity prices affect a firm's industry choice and productivity growth. I construct an instrument for electricity price as the interaction between coal price and the share of thermal generation in a state's total electricity generation capacity. I find that in response to an exogenous increase in electricity price, firms switch to less electricity-intensive production processes within narrowly defined industries, reduce their machine intensity, and have lower output and productivity growth rates. Thus, electricity constraints may limit a country's growth by leading firms to operate in industries with fewer productivity-enhancing opportunities.