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Macroeconomic effects of carbon-intensive energy price changes: A model comparison

Author

Listed:
  • Matthias Burgert

    (SWISS NATIONAL BANK)

  • Matthieu Darracq Pariès

    (EUROPEAN CENTAL BANK)

  • Luigi Durand

    (BANK OF CHILE)

  • Mario González

    (CENTRAL BANK OF CHILE)

  • Romanos Priftis

    (EUROPEAN CENTRAL BANK)

  • Oke Röhe

    (DEUTSCHE BUNDESBANK)

  • Matthias Rottner

    (BIS AND DEUTSCHE BUNDESBANK)

  • Edgar Silgado-Gómez

    (BANCO DE ESPAÑA)

  • Nikolai Stähler

    (DEUTSCHE BUNDESBANK)

  • Janos Varga

    (EUROPEAN COMMISSION)

Abstract

This paper presents a novel model comparison to examine the challenges for monetary policy posed by changes in carbon-intensive energy prices. The environmental monetary models employed have a detailed multi-sector structure. The comparison assesses the effects of both a temporary and a permanent energy price increase, with a particular focus on the euro area and the United States. The temporary and permanent price shocks are both inflationary. However, the inflationary impact of the permanent shock depends on the underlying model assumptions and monetary policy response. In addition, the analysis establishes that these models share significant commonalities in their quantitative and qualitative results, while also revealing cross-country differences.

Suggested Citation

  • Matthias Burgert & Matthieu Darracq Pariès & Luigi Durand & Mario González & Romanos Priftis & Oke Röhe & Matthias Rottner & Edgar Silgado-Gómez & Nikolai Stähler & Janos Varga, 2025. "Macroeconomic effects of carbon-intensive energy price changes: A model comparison," Working Papers 2550, Banco de España.
    • Handle: RePEc:bde:wpaper:2550
    DOI: https://doi.org/10.53479/41985
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    Keywords

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    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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