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What is the difference between fossil fuel embargo and price shocks?

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  • Clemens, Marius
  • Röger, Werner

Abstract

In this paper, we model a fossil fuel embargo as a temporary quantity constraint on fossil fuel imports and we compare the impact with the effect of a fossil fuel price shock. We show that while both shocks have similar responses of output and inflation, they differ with respect to the reaction of other macroeconomic components, such as consumption, exports and the trade balance. In particular, an embargo has more adverse effects on the functional income distribution.

Suggested Citation

  • Clemens, Marius & Röger, Werner, 2024. "What is the difference between fossil fuel embargo and price shocks?," Energy Economics, Elsevier, vol. 132(C).
    • Handle: RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001270
    DOI: 10.1016/j.eneco.2024.107419
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    Cited by:

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    2. Werner Roeger & Paul J. J. Welfens, 2022. "Gas price caps and electricity production effects in the context of the Russo-Ukrainian War: modeling and new policy reforms," International Economics and Economic Policy, Springer, vol. 19(4), pages 645-673, October.
    3. Małgorzata Sztorc, 2025. "The Behavior of European Union Companies in Terms of Increasing Energy Efficiency from the Perspective of Achieving Climate Neutrality," Energies, MDPI, vol. 18(3), pages 1-40, January.
    4. Pataracchia, Beatrice & Pfeiffer, Philipp & Ratto, Marco & Teresiński, Jan, 2026. "Energy commodity price shocks in the euro area: Evidence from a large-scale structural model," Journal of Economic Dynamics and Control, Elsevier, vol. 189(C).

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    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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