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Rapidly Rising Energy Prices: Does the Driver of the Energy Market Imbalance Matter?

Published online by Cambridge University Press:  26 March 2020

Jared Bebee  and
Ben Hunt
Jared Bebee
Affiliation:
International Monetary Fund
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Abstract

This paper uses a variant of the IMF's Global Economy Model (GEM) to examine the macroeconomic impact of the rise in energy prices since the end of 2003 in the Euro Area, the United Kingdom and the United Sates. The analysis illustrates how the impact varies across these countries based on their level of energy use and energy production. In addition, the analysis uses Euro Area simulations to consider how the macroeconomic implications depend on the factors driving higher energy prices. If labour supply or tradable sector productivity increases in emerging Asian economies are an important factor driving energy price increases, then industrial countries receive some positive terms-of-trade effects coming through non-energy tradable goods that offset some of the negative implications of permanently higher real energy prices. The stronger are the industrial countries' trade links with emerging Asia, the larger will be the offsets.

Keywords

Oil price shocksGEMGlobalisationE3E52
Type
Articles
Information
National Institute Economic Review , Volume 199 , 01 January 2007 , pp. 114 - 125
Copyright
Copyright © 2007 National Institute of Economic and Social Research

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