The invasion of Ukraine and the energy crisis: comparative advantages in equity valuations

Fabrizio Ferriani and Andrea Giovanni Gazzani

No 789, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We study the impact of the widening energy price differentials caused by the war in Ukraine on the returns of European and US firms. Using several measures of firms' exposure to energy consumption, we show that return differentials between EU and US firms widened significantly after the outbreak of the war in Ukraine. Our results indicate a persistent comparative disadvantage between the two regions, driven by heterogeneous energy costs, which has continued even after the partial subsiding of the energy shock by the end of 2022. These findings suggest that the impact of the war on energy prices may have lasting economic implications for Europe, potentially exacerbating its competitiveness disadvantages compared with other geographic regions that have access to more affordable energy inputs.

Keywords: war in Ukraine; energy impacts; energy comparative advantage; financial performance (search for similar items in EconPapers)
JEL-codes: G12 G14 G32 G33 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-cfn, nep-cis, nep-ene and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: The invasion of Ukraine and the energy crisis: Comparative advantages in equity valuations (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_789_23

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