The Macroeconomic Effects of the Energy Price Cap: An Evaluation Conducted Using the ThreeME Multisectoral Model

Paul Malliet and Anissa Saumtally

Economie et Statistique / Economics and Statistics, 2025, issue 547, 21-47

Abstract: [eng] The energy crisis that struck Europe in 2021 as the world bounced back from COVID, and amplified by the Russian invasion of Ukraine, led to a sharp increase in energy prices, particularly gas prices. In this context, European nations implemented emergency measures to protect households’ purchasing power and the competitiveness of their businesses. France chose to mitigate energy price rises by implementing a price cap. Making use of a computable general equilibrium model, we explicitly simulate the divergent trajectories of energy prices with and without this price cap. Our results show that the budgetary cost of this measure was lower than initially expected, and while the macroeconomic impact was also relatively small, it did nonetheless preserve household purchasing power.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nse:ecosta:ecostat_2025_547_3

DOI: 10.24187/ecostat.2025.547.2137

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