Macroeconomic impacts of contemporary electricity reform: 19 OECD and seven Australian states

This paper examines the impacts of market-oriented electricity reform on macroeconomic variables. It develops an ad hoc econometric model for this purpose, using a panel data of 19 developed countries plus seven Australian States for the period of 1970-2008. Significance of the impacts is firstly tested against three distinct institutional features of electricity reform, namely: (1) organizational restructuring (i.e., functional unbundling of traditionally vertically integrated industry); (2) market restructuring (introduction of mandatory bid-based spot market); and (3) privatization. The extents of the impacts are, then, quantified in terms of relative contribution of such institutional changes to aggregate output growth in short-run, medium-run and long-run. The results reveal that only functional unbundling has made significant contribution to output growth. The results, further, specify that functional unbundling has made, on average, an additional 0.06% and 2.7% contribution to output growth rate in medium-run and long-run respectively.