Historical energy price shocks and their changing effects on the economy

Dirk Jan van de Ven and Roger Fouquet

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The purpose of this paper is to identify the changes in the impact of energy shocks on economic activity – with an interest in assessing if an economy's vulnerability and resilience to shocks improved with economic development. Using data on the United Kingdom over the last three hundred years, the paper identifies supply, aggregate demand and residual shocks to energy prices and estimates their changing influence on energy prices and GDP. The results suggest that the impacts of supply shocks rose with its increasing dependence on coal, and declined with its partial transition to oil. However, the transition from exporting coal to importing oil increased the negative impacts of demand shocks. More generally, the results indicate that improvements in vulnerability and resilience to shocks did not progress systematically as the economy developed. Instead, the changes in impacts depended greatly on the circumstances related to the demand for and supply of energy sources. If these experiences are transferable to future markets, a transition to renewable energy sources is likely to reduce vulnerability and increase resilience to energy price shocks.

JEL-codes: N53 N73 O33 Q43 (search for similar items in EconPapers)
Date: 2017-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published in Energy Economics, 1, February, 2017, 62, pp. 204-216. ISSN: 0140-9883

Downloads: (external link)
http://eprints.lse.ac.uk/68778/ Open access version. (application/pdf)

Related works:
Journal Article: Historical energy price shocks and their changing effects on the economy (2017)
Working Paper: Historical energy price shocks and their changing effects on the economy (2014)
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:ehl:lserod:68778

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().