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An Empirical Analysis of Macro-wide and Sectoral Responses to Brown Energy Price Shocks in EU Economies

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  • Giovanni Barci
  • Laurent Maurin

Abstract

We build a Brown Energy Price Index (BEPI) for EU economies and sectors. The index is then incorporated in PVAR models to analyse the reaction to price shock, the impact on economic activity and the change in the energy mix. The panel dimension comes from the thirteen EU economies and it is declined across five economic sectors. At the macroeconomic level, a positive shock to BEPI triggers some substitution between brown and green energy. Since the substitution falls short of the needs, activity contracts; nonetheless, part of the energy substitution is maintained after the shock is absorbed. At the sector level, our results confirm the substitution effect and the adverse impact on activity. Moreover, the magnitude of the responses are shown to be correlated with the sectors brown energy intensity of production. JEL Codes: C30, E30, Q40

Suggested Citation

  • Giovanni Barci & Laurent Maurin, 2025. "An Empirical Analysis of Macro-wide and Sectoral Responses to Brown Energy Price Shocks in EU Economies," The Energy Journal, , vol. 46(3), pages 25-50, May.
    • Handle: RePEc:sae:enejou:v:46:y:2025:i:3:p:25-50
    DOI: 10.1177/01956574241306329
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    More about this item

    Keywords

    synthetic energy price; PVAR; brown and green energy; macroeconomic response; sector asymmetries; substitution;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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