The Many Channels of Firm s Adjustment to Energy Shocks: Evidence from France

Lionel Fontagn, Philippe Martin and Gianluca Orefice
Authors registered in the RePEc Author Service: Lionel Fontagné

Working papers from Banque de France

Abstract: Based on firm level data in the French manufacturing sector, we find that firms adapt quickly, strongly and through multiple channels to energy shocks, even though electricity and gas bills represent a small share of their total costs. Over the period 1996-2019, faced with an idiosyncratic energy price increase, firms reduce their energy demand, improve their energy efficiency, increase intermediate inputs imports and optimize energy use across plants. Firms are also able to pass-through the cost shock fully into their export prices. Their production, exports and employment fall. A consequence of these multiple adjustment mechanisms is that the fall in profits is either non-significant, small or specific to only the most energy intensive firms. We also find that the impact of electricity shocks has weakened over time, suggesting that only firms able to adapt their production process to energy cost shocks have survived. Importantly, when faced with large electricity and gas price increases, firms are less able to reduce their consumption. These results shed light on the mechanisms of resilience of the European manufacturing sector in the context of the present energy crisis.

Keywords: Energy Crisis; Employment; Production; Competitiveness; Electricity; Gas (search for similar items in EconPapers)
JEL-codes: L6 Q41 Q43 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2023
New Economics Papers: this item is included in nep-bec, nep-eec, nep-ene and nep-eur
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The many channels of firm’s adjustment to energy shocks: evidence from France (2024)
Working Paper: The Many Channels of Firm's Adjustment to Energy Shocks: Evidence from France (2024)
Working Paper: The Many Channels of Firm's Adjustment to Energy Shocks: Evidence from France (2024)
Working Paper: The Many Channels of Firm’s Adjustment to Energy Shocks: Evidence from France (2023)
Working Paper: The Many Channels of Firm's Adjustment to Energy Shocks: Evidence from France (2023)
Working Paper: The Many Channels of Firm’s Adjustment to Energy Shocks: Evidence from France (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:929

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