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Rapidly Rising Energy Prices: does the Driver of the Energy Market Imbalance Matter?

Author

Listed:
  • Jared Bebee

    (International Monetary Fund, JBebee@imf.org)

  • Ben Hunt

    (International Monetary Fund, BHUNT@imf.org)

Abstract

This paper uses a variant of the IMF's Global Economy Model (GEM) to examine the macroeconomic impact of the rise in energy prices since the end of 2003 in the Euro Area, the United Kingdom and the United Sates. The analysis illustrates how the impact varies across these countries based on their level of energy use and energy production. In addition. the analysis uses Euro Area simulations to consider how the macroeconomic implications depend on the factors driving higher energy prices. If labour supply or tradable sector productivity increases in emerging Asian economies are an important factor driving energy price increases, then industrial countries receive some positive terms-of-trade effects coming through non-energy tradable goods that offset some of the negative implications of permanently higher real energy prices. The stronger are the industrial countries' trade links with emerging Asia, the larger will be the offsets.

Suggested Citation

  • Jared Bebee & Ben Hunt, 2007. "Rapidly Rising Energy Prices: does the Driver of the Energy Market Imbalance Matter?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 199(1), pages 114-125, January.
  • Handle: RePEc:sae:niesru:v:199:y:2007:i:1:p:114-125
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    Citations

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    Cited by:

    1. Pascal Jacquinot & Mika Kuismanen & Ricardo Mestre & Martin Spitzer, 2009. "An Assessment of the Inflationary Impact of Oil Shocks in the Euro Area," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-84.

    More about this item

    Keywords

    Oil price shocks; GEM; Globalisation JEL classifications: E3; E52;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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