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Will Electricity Deregulation Push Inflation Lower?

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Deregulation of electricity generation will offer consumers many advantages, including dramatically lower energy costs. From a macroeconomic viewpoint, electricity purchases are interesting because they are a major component of consumers' budgets (and thus of the CPI) and a large factor of production for many companies. This raises the possibility that electricity deregulation could create a substantial shock to the overall price trend, comparable to other recent energy shocks. The benefits to consumers and producers identified in this article strongly support legislative efforts to increase competition in one of the last strongholds of regulated profits.

Suggested citation: Schweitzer, Mark, and Eric Thompson. “Will Electricity Deregulation Push Inflation Lower?” Federal Reserve Bank of Cleveland, Economic Review, vol. 36. no. 3, pp. 02-12, 09.01.2000.

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