The impact of energy price increases on the Polish economy
Michał Gradzewicz,
Janusz Jabłonowski,
Michał Sasiela and
Zbigniew Żółkiewski
Additional contact information
Janusz Jabłonowski: Narodowy Bank Polski
Michał Sasiela: Narodowy Bank Polski
Zbigniew Żółkiewski: Narodowy Bank Polski
No 369, NBP Working Papers from Narodowy Bank Polski
Abstract:
The aim of this paper is to assess the impact on the Polish economy of energy price shocks arising after the Russian invasion of Ukraine. We computed both the impact of the energy shocks (separately for gas, oil and coal prices) on the real side of the economy, and the pass-through of energy prices to the overall price level. The former part of the analysis was simulated using a computable general equilibrium (CGE) model of the Polish economy while the price effects of the shocks were simulated using a dual Leontief price model. Additionally, the price model was augmented with the mechanism of nominal wage adjustment suggested by the theory. This methodological novelty is our original contribution to empirical economics. Our simulations indicate that the price shock for all energy goods of the magnitude observed in 2022 resulted in a decrease in GDP of about 2.9% relative to the baseline solution. Moreover, we document a strong pro-inflationary effect of rising energy prices. After a combined shock to energy prices the consumption deflator increases by 10.3% (when we include the spreading the price increases across the industries), but the effect is simulated at 15.4%, when we account for an additional nominal wage adjustments (ensuring no real wage changes). We show that due to the differences in forward and backward propagation of shocks, the oil price shock had the strongest impact on real aggregates, whereas prices were hit the strongest by the gas price shock.
Keywords: CGE; dual Leontief model; energy shocks; price pass-through (search for similar items in EconPapers)
JEL-codes: C67 C68 D58 E16 E17 E31 Q43 (search for similar items in EconPapers)
Pages: 38
Date: 2024
New Economics Papers: this item is included in nep-cis, nep-ene and nep-tra
Note: The authors are greatful to Karol Szafranek, Paweł Macias and colleagues from NBP/DABE for insightful comments. The views expressed herein are those of the authors and not necessarily those of Narodowy Bank Polski.
References: Add references at CitEc
Citations:
Downloads: (external link)
https://static.nbp.pl/publikacje/materialy-i-studia/369_en.pdf (application/pdf)
Related works:
Journal Article: The impact of energy price increases on the Polish economy (2024)
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:nbp:nbpmis:369
Access Statistics for this paper
More papers in NBP Working Papers from Narodowy Bank Polski Contact information at EDIRC.
Bibliographic data for series maintained by Jakub Growiec (mis@nbp.pl).