Who foots the bill? The uneven impact of the recent energy price shock

Niccolò Battistini, Alina Bobasu and Johannes Gareis

Economic Bulletin Boxes, 2023, vol. 2

Abstract: This box assesses the uneven economic effects of the recent surge in energy prices across households and firms in the euro area. The box first uses disaggregated data to disentangle the effects of the deterioration in the energy terms of trade on final expenditures and aggregate income, allocating the implied purchasing power losses across the household income distribution. The box then uses structural economic models to identify the energy price shock underlying the recent terms-of-trade deterioration and to gauge its direct, indirect and second-round effects on the overall economy. As regards the results, the different exposures of households to higher energy costs and lower income indicate a relatively larger impact of the energy terms-of-trade deterioration on lower-income households. The direct and indirect effects of the energy price shock mainly impacted private consumption on the expenditure side and non-energy sectors on the income side. The second-round effects spread the impact more evenly across private consumption and investment, with the government partially shielding private sector disposable income. JEL Classification: E31, E21

Keywords: direct; indirect and second-round effects; energy price shocks; income distribution; input-output tables; structural VAR (search for similar items in EconPapers)
Date: 2023-03
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.ecb.europa.eu//press/economic-bulletin ... 5~d811cd64f4.en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2023:0002:5

Access Statistics for this article

More articles in Economic Bulletin Boxes from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().