Understanding the energy sector deregulations: international evidence

Shengquan Wang and Jiawen Luo ()
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Shengquan Wang: Beijing Normal University
Jiawen Luo: South China University of Technology

Empirical Economics, 2024, vol. 66, issue 4, No 4, 1551 pages

Abstract: Abstract We extend the political economy analysis of reforms proposed by Abiad and Mody (Am Econ Rev 95(1):66–88, 2005) to the energy sector, then the ‘crises’ and ‘learning’ hypotheses are modified, and the roles of economic openness and capital markets are emphasised. Given the hypotheses, a conceptual framework of energy deregulations is proposed. Furthermore, we employ 46 countries panel dataset to conduct the empirical analysis. We find that energy sector deregulations are a dynamic learning process; specifically, the U-shaped nexus between the previous experience of deregulations and the current change of deregulations is confirmed. The systemic banking crises and the sovereign debt crises are the drivers of deregulations in the electricity sector and gas sector, respectively, while the currency crises, economic recession, and inflation reverse it. For political variables, we find the parliamentary government significantly matters with the reforms, while other variables will drag the deregulations or shape the deregulations insignificantly. The economic openness and capital market development are identified as the prominent-driven factors of energy reforms. The baseline results are stable through a series of robustness checks.

Keywords: Energy deregulations; ‘Crises’ hypothesis; ‘Learning’ hypothesis; Political economy (search for similar items in EconPapers)
JEL-codes: G28 K20 Q43 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00181-023-02508-5

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