Weathering the storm: a characterization of the recent terms-of-trade shock in Italy

Claire Giordano and Enrico Tosti

No 831, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This study analyses the negative shock to Italy's terms of trade since the second half of 2021: the shock was less pronounced than the 1973-74 oil crisis, yet particularly sharp. The terms-of-trade deterioration was driven by energy goods and was greater than in the other euro-area economies due to a higher rise in energy import prices and to a greater share of energy products in total imports. The energy component was also the main driver both of the strong deterioration in the current account balance and of the large negative income effect. At any rate, Italy has successfully weathered the storm: the gradual recovery in the terms of trade since 2022 has led to the return to a positive current account balance and to a positive income effect.

Keywords: terms of trade; energy prices; energy shock (search for similar items in EconPapers)
JEL-codes: F10 F40 Q40 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-ene, nep-int and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_831_24

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