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Working Paper
What Fuels the Volatility of Electricity Prices?
We use emergency outages of coal generators as an exogenous source of variation in the power generation stack to study how changes in marginal fuel affect real-time prices. Contrary to anecdotal evidence, we find that wholesale prices are less volatile when natural gas is on the margin more often.
Price Volatility and Headline Inflation
Movements in “sticky prices”—items that show low price volatility—may indicate that recent swings in U.S. headline inflation are only temporary.