What determines the output drop after an energy price increase: household or firm energy share?
AbstractDuring the past thirty-five years, energy use as a fraction of output has dropped significantly at both the household and the firm levels. Therefore, we investigate a dynamic stochastic generalized equilibrium model economy's response to an energy price hike for different firm and household energy shares. Simulation results indicate that the economy's output response is mainly determined by the firm energy share. Increasing the household energy share while keeping firm energy share constant actually decreases the output response.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2007-20.
Date of creation: 2007
Date of revision:
Other versions of this item:
- Dhawan, Rajeev & Jeske, Karsten, 2008. "What determines the output drop after an energy price increase: Household or firm energy share?," Economics Letters, Elsevier, vol. 101(3), pages 202-205, December.
- NEP-ALL-2007-09-09 (All new papers)
- NEP-CMP-2007-09-09 (Computational Economics)
- NEP-ENE-2007-09-09 (Energy Economics)
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