Soaring Electricity Prices: Is Cutting the Cable a Good Idea?

Christoph Böhringer and Bengt Kriström

No 12765, CESifo Working Paper Series from CESifo

Abstract: In light of sharply rising international electricity prices, Sweden as a major electricity-exporting country has considered export restrictions to protect its domestic electricity- and export-intensive industries. We employ a computable general equilibrium model calibrated to Swedish data to quantify the economy-wide impacts of export restrictions. We find that while export restrictions may protect domestic electricity- and export-intensive industries, they lead to substantial foregone export revenues and overall welfare losses. Targeted subsidies to employment or output in these industries, on the other hand, can achieve identical protective effects as export restrictions while preserving most of the gains from trade. The analysis also highlights the distributional consequences of electricity price increases, underscoring the need for policymakers to consider potential equity implications.

Keywords: electricity price shocks; export restrictions; subsidies; computable general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: D58 Q48 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12765

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