Quantifying Bidirectional Connectedness: A Quantile Analysis of Electricity Price Fluctuations and Industrial Production Dynamics in Colombia
Resumen
This study explores the intricate relationship between electricity prices and industrial production, with a specific focus on scenarios within the mid-range and tail distribution. Recognizing the bidirectional impact between these variables, the analysis utilizes Colombian data, where 70% of electricity is hydroelectric and the rest is thermopower generated from fossil fuels. Climate-induced fluctuations affecting hydroelectric generation can influence electricity prices, subsequently impacting industrial production. The findings reveal that increased electricity prices adversely affect industrial production due to heightened production costs, while increased industrial production contributes to lower electricity prices, indicating a bidirectional impact. The study's implications suggest strategic planning opportunities, aligning production with electricity price fluctuations, and policy formulation to stimulate production for positive impacts on industrial production and overall economic growth.
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