Macroeconomic effects of fiscal policy under an energy supply shock

Johan Gustafsson, Xiaofei Ma, Junior Maih and Mattias Vesterberg

Energy Policy, 2025, vol. 203, issue C

Abstract: We study the macroeconomic effects of four fiscal policy responses to an energy supply shock: energy vouchers to all households, energy vouchers only to low-income households, energy vouchers to non-energy goods producers, and subsidies for investments in the energy sector. The analysis is carried out in a DSGE model that explicitly includes the energy sector. Calibrating the model to Swedish data, our results show that subsidies for investment in the energy sector are the most effective instrument to reduce energy prices in the short to medium term. However, this policy is welfare-dominated by energy vouchers given to households, as it immediately compensates low-income, non-saving households in the event of a shock. Providing energy vouchers to non-energy firms prevents energy prices from falling as quickly as they would without policy intervention and is also the least desirable from a welfare perspective.

Keywords: Energy price; Investment subsidy; Energy voucher (search for similar items in EconPapers)
JEL-codes: D58 E62 H53 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421525001235
Full text for ScienceDirect subscribers only

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:eee:enepol:v:203:y:2025:i:c:s0301421525001235

DOI: 10.1016/j.enpol.2025.114616

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().