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Energy prices in the Bank of Italy macroeconometric model

Author

Listed:
  • Pietro Cova

    (Bank of Italy)

  • Davide Fantino

    (Bank of Italy)

  • Lisa Rodano

    (Bank of Italy)

Abstract

The sharp increases in energy commodity prices, and in particular in natural gas prices, in 2021 and 2022 led to a notable surge in inflation in Italy and the euro area. We extend the Bank of Italy's quarterly econometric model (BIQM) to adequately capture the direct and indirect inflationary and macroeconomic effects of the extraordinary increases in energy prices, modelling gas and oil prices separately. We assess the forecasting properties of the model and also evaluate the impact of the measures taken by governments to counter the macroeconomic consequences of the energy crisis.

Suggested Citation

  • Pietro Cova & Davide Fantino & Lisa Rodano, 2025. "Energy prices in the Bank of Italy macroeconometric model," Questioni di Economia e Finanza (Occasional Papers) 942, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_942_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2025-0942/QEF_942_25.pdf
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    More about this item

    Keywords

    macro-econometric models; Italy; forecasting; policy simulation;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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