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How higher oil prices could affect euro area potential output

Author

Listed:
  • Le Roux, Julien
  • Szörfi, Béla
  • Weißler, Marco

Abstract

Oil prices spiked in the immediate aftermath of Russia’s invasion of Ukraine and have been volatile ever since. As the current increase in oil prices mainly reflects supply-side factors, it could also affect potential output. This box uses several approaches to assess the channels through which oil price hikes have an impact on potential output and to estimate the possible magnitude of the impact of the current shock. The quantitative estimates proposed should be regarded with caution given the current volatility in the price of a barrel of Brent crude oil and the uncertainty surrounding the amplitude of the shock, which will depend on how the conflict develops. JEL Classification: E22, E31, E32, Q41

Suggested Citation

  • Le Roux, Julien & Szörfi, Béla & Weißler, Marco, 2022. "How higher oil prices could affect euro area potential output," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2022:0005:4
    Note: 3182505
    as

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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2022/html/ecb.ebbox202205_04~f296647c4b.en.html
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    Citations

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    Cited by:

    1. Nuno Pereira & José Antunes & Luís Barreto, 2023. "Impact of Management and Reverse Logistics on Recycling in a War Scenario," Sustainability, MDPI, vol. 15(4), pages 1-20, February.

    More about this item

    Keywords

    oil prices; Potential output; supply side;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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