The impact of permanent energy price shocks on the UK economy

Richard Harrison, Ryland Thomas and Iain de Weymarn ()
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Iain de Weymarn: Bank of England, Postal: Publications Group Bank of England Threadneedle Street London EC2R 8AH

No 433, Bank of England working papers from Bank of England

Abstract: This paper outlines the properties of one of the models used at the Bank of England for analysing the impact of energy prices on the UK economy. We build a dynamic general equilibrium model that includes a variety of channels through which energy prices affect demand and supply. On the demand side we model household consumption of final energy goods (petrol and utilities) separately from other goods and services. On the supply side, we model the production of final energy goods and the way that they enter the production process of other goods and services. We calibrate the model using UK data and examine how the various channels in the model contribute to the responses to permanent energy price shocks of a similar magnitude to those observed in the recent data. We show the effects of such shocks have important implications for monetary policy.

Keywords: Energy; prices. (search for similar items in EconPapers)
JEL-codes: E27 E37 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2011-07-26
New Economics Papers: this item is included in nep-cba, nep-ene and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0433

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