Quantity versus price dynamics: the role of energy and bottlenecks in the Italian industrial sector

Francesco Corsello (), Marco Flaccadoro and Stefania Villa
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Francesco Corsello: Bank of Italy

No 781, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We assess the impact on the Italian industrial sector of the abrupt increase in energy prices and of shortages in the supply of inputs since the early months of 2021, focusing on production and producer prices and conducting a disaggregated analysis. Producer prices in energy- and non-energy-intensive industries had already exhibited different dynamics at the beginning of 2021. The same pattern characterized industrial production only after the spring of 2022. These developments are consistent with the result of firms' responses to bottlenecks and energy supply shocks, as shown by the Bank of Italy’s Business Outlook Survey of Industrial and Service Firms in the second-half of 2022. The majority of firms, which have been affected by higher energy costs or supply bottlenecks, reported having increased their selling prices. Some firms also reduced profit margins and implemented energy-saving measures. Only a small share of firms reported having reduced or discontinued production.

Keywords: energy prices; producer prices; bottlenecks; industrial production (search for similar items in EconPapers)
JEL-codes: E23 E31 E32 (search for similar items in EconPapers)
Date: 2023-06
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Citations: View citations in EconPapers (4)

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