Price Transmission Effect of Coal and Electricity Linkage: A Partial Transmission Input-Output Analysis

Abstract

Coal and electricity linkage reform has a significant impact on the whole price level in China. In order to analysis the price transmission effect, this paper firstly introduces a CTC (cost transmission capacity) input-output price model, use 2005, 2007 and 2010 China input-output tables and the main product price index from 2005 to 2011 to estimates the cost transmission capacity of 39 industries. And then designs 2 stages of simulation scenarios to compare the effect when the price of coal and electricity is linkage or not. The results show that the coal price shocks exert greater impact to energy resources sectors and their downstream industries such as oil and gas extraction than other industries, and the rising of GDP deflator is more significant than that of PPI.