What is the difference between fossil fuel embargo and price shocks?

Marius Clemens and Werner Röger

Energy Economics, 2024, vol. 132, issue C

Abstract: In this paper, we model a fossil fuel embargo as a temporary quantity constraint on fossil fuel imports and we compare the impact with the effect of a fossil fuel price shock. We show that while both shocks have similar responses of output and inflation, they differ with respect to the reaction of other macroeconomic components, such as consumption, exports and the trade balance. In particular, an embargo has more adverse effects on the functional income distribution.

Keywords: Energy prices; Embargo; General equilibrium model; Fiscal policy; Monetary policy (search for similar items in EconPapers)
JEL-codes: E63 F51 Q43 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001270

DOI: 10.1016/j.eneco.2024.107419

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