Oil Price Shock, Energy Prices and Inflation – A Comparison of Austria and the EU
The marked increase in the price of crude oil has also affected the prices of motor fuels, heating oil and other forms of energy. The extent and speed of these price reactions have varied widely in EU countries, and the accompanying inflationary effects have differed accordingly. For monetary and economic policy, it is important to know the channels through which oil price fluctuations are transmitted in order to assess their effects on inflation, economic growth and employment. This study presents a current overviewof oil and primary energy markets worldwide and estimates the elasticities and the speed of adjustment parameters of motor fuel and heating oil prices in response to oil price fluctuations in the EU-25. In addition, we test whether prices react asymmetrically to increases and decreases in crude oil prices and examine their transmission to other forms of energy, such as natural gas, electricity, solid fuels and district heating.We highlight the effect of volume-based excise taxes, which have a strong differentiating as well as dampening effect on prices, and address the issue of whether fiscal policy should cushion the impact of price increases, for example by lowering energy taxes or by providing energy subsidies. Then we quantify the direct inflationary effects of an oil price shock in Austria in a simple simulation using the OeNB's inflation forecasting model. Finally, we derive conclusions for monetary and economic policy.
Volume (Year): (2006)
Issue (Month): 1 ()
|Contact details of provider:|| Postal: P.O. Box 61, A-1011 Vienna, Austria|
Phone: +43/1/404 20 7405
Fax: +43/1/404 20 7499
Web page: http://www.oenb.at
More information through EDIRC
|Order Information:|| Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jürgen Janger, 2005. "Sectoral Regulation in Austria before and after EU Accession — The Network Industries as a Case in Point," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 178195-1781.
- Jeffrey D. Karrenbrock, 1991. "The behavior of retail gasoline prices: symmetric or not?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 19-29.
- M. Galeotti & A. Lanza & M. Manera, 2001.
"Rockets and feathers revisited: an international comparison on European gasoline markets,"
Working Paper CRENoS
200112, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Galeotti, Marzio & Lanza, Alessandro & Manera, Matteo, 2003. "Rockets and feathers revisited: an international comparison on European gasoline markets," Energy Economics, Elsevier, vol. 25(2), pages 175-190, March.
- Manfred Fluch & Fabio Rumler, 2005. "Price Developments in Austria after EU Accession and in Monetary Union," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 6989-6989.
- Nathan S. Balke & Stephen P. A. Brown & Mine Yücel, 1998. "Crude oil and gasoline prices: an asymmetric relationship?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q 1, pages 2-11.
- Severin Borenstein & A. Colin Cameron, 1992.
"Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?,"
NBER Working Papers
4138, National Bureau of Economic Research, Inc.
- Severin Borenstein & A. Colin Cameron & Richard Gilbert, 1997. "Do Gasoline Prices Respond Asymmetrically to Crude Oil Price Changes?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 305-339.
- Bewley, R. A., 1979. "The direct estimation of the equilibrium response in a linear dynamic model," Economics Letters, Elsevier, vol. 3(4), pages 357-361.
- Duffy-Deno, Kevin T., 1996. "Retail price asymmetries in local gasoline markets," Energy Economics, Elsevier, vol. 18(1-2), pages 81-92, April.
- Bacon, Robert W., 1991. "Rockets and feathers: the asymmetric speed of adjustment of UK retail gasoline prices to cost changes," Energy Economics, Elsevier, vol. 13(3), pages 211-218, July.
When requesting a correction, please mention this item's handle: RePEc:onb:oenbmp:y:2006:i:1:b:3. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudia Kwapil)
If references are entirely missing, you can add them using this form.