The Macroeconomic and Redistributive Effects of Shielding Consumers from Rising Energy Prices: a Real Time Evaluation of the French Experiment *

Francois Langot, Selma Malmberg, Fabien Tripier and Jean-Olivier Hairault

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Abstract: The French government has implemented a tariff shield on energy products to dampen the impact of the increase in energy prices started in 2021. To assess the macroeconomic and redistributive effects of this policies, we propose a new methodology for ex-ante evaluations, based on the government forecasts embedded in the Finance Act and on a new-Keynesian business cycle model with heterogeneous agents. From a macroeconomic perspective, this policy supports economic growth and curbs inflation, but slightly rises the debt-to-GDP ratio. In terms of redistribution, this policy contains the rise in consumption inequalities. We compare the effects of this policy with alternative policies such as a re-indexation of wages on prices or a redistributive policy targeted at the most vulnerable households.

Keywords: HANK model; Energy crisis; Tariff shield; Policy evaluation (search for similar items in EconPapers)
Date: 2023-09-12
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