Energy Price Shocks in the European Union: Macroeconomic Impacts, Distributional Effects and Policy Responses

20341 11 108642 2 329224 document 108642 ssrn-4945346.pdf application/pdf 799f630a9d06ca654a80a57f3f8801c5 MD5 1488415 2025-01-13 10:55:54 https://pure.iiasa.ac.at/id/eprint/20341/1/ssrn-4945346.pdf 20341 1 1 application/pdf text en public cc_by_4

ssrn-4945346.pdf

published 108643 1 329226 document 108643 indexcodes.txt text/x-c++ 1cd922589f45d5fb1ed29e6ee795a411 MD5 25456 2025-01-13 10:56:22 https://pure.iiasa.ac.at/id/eprint/20341/2/indexcodes.txt 20341 2 2 text/x-c++ other Generate index codes conversion from text to indexcodes en public

indexcodes.txt

lightbox.jpg

preview.jpg

medium.jpg

small.jpg

http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/108642 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/108642 http://eprints.org/relation/issmallThumbnailVersionOf https://pure.iiasa.ac.at/id/document/108642 archive 2 disk0/00/02/03/41 2025-01-13 12:10:06 2025-04-04 16:22:51 2025-01-13 12:10:06 article show 1 Kremer E. Reissl S. Fierro L.E. 9839 0000-0002-4378-1375 Emmerling J. Lamperti F. Roventini A. Energy Price Shocks in the European Union: Macroeconomic Impacts, Distributional Effects and Policy Responses pub ASA EM Energy price shocks, Inflation, Agent-based model, Integrated assessment model The macroeconomic consequences of energy shocks, their distributional effects, and the potential remedies have recently scaled up the EU policy agenda. In this paper, we employ an agent-based, stock-flow consistent model empirically calibrated to the EU27 economy to evaluate the macroeconomic effects of an energy price shock akin to that which took place in 2022. Our focus is on a scenario in which the economy experiences a sudden, sharp increase in the price of imported fossil fuels, which affects the price of energy and thereby firms' production costs and output prices. We show that the magnitude and persistence of the resulting inflationary episode, as well as the effects on functional income distribution, employment and economic activity, strongly depend on government intervention, the sensitivity of nominal wage claims to inflation, and the extent to which increases (and subsequent decreases) in the price of energy inputs are passed on into final output prices. We find that an empirically calibrated mix of transfer payments can be very effective at mitigating the macroeconomic impacts of the energy price shock. However, such policy interventions are never able to fully countervail the shift toward profits of the income distribution. Additional measures targeting prices to ensure the complete pass-through of energy price decreases once the shock recedes provide a solution to this issue. 2024-07-05 doi:10.2139/ssrn.4945346 3594 public SSRN Electronic Journal 1556-5068 Energy Price Shocks in the European Union: Macroeconomic Impacts, Distributional Effects and Policy Responses yes info:eu-repo/semantics/article