Macroeconomic effects of carbon-intensive energy price changes: a model comparison

Matthias Burgert, Matthieu Darracq Paries, Luigi Durand, Mario Gonzalez, Romanos Priftis, Oke Röhe, Matthias Rottner, Edgar Silgado-Gómez, Nikolai Stähler and Janos Varga

No 1313, BIS Working Papers from Bank for International Settlements

Abstract: This paper presents a novel model comparison to examine the challenges posed by changes in carbon-intensive energy prices for monetary policy. The employed environmental monetary models have a detailed multi-sector structure. The comparison assesses the effects of both a temporary and a permanent energy price increase with a particular focus on the euro area and the United States. Temporary and permanent price shocks are both inflationary. However, the inflationary impact of the permanent shock depends on the underlying model assumptions and monetary policy response. The analysis also establishes that these models share large commonalities in their quantitative and qualitative results, while also pointing out cross-country differences.

Keywords: climate change; monetary policy; multi-sector models; model comparison; DSGE models (search for similar items in EconPapers)
JEL-codes: C54 E52 H23 Q43 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-dge and nep-mon
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Working Paper: Macroeconomic effects of carbon-intensive energy price changes: A model comparison (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1313

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