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

Author

Listed:
  • Matthias Burgert
  • Matthieu Darracq Pariès
  • Luigi Durand
  • Mario Gonzalez
  • Romanos Priftis
  • Oke Röhe
  • Matthias Rottner
  • Edgar Silgado-Gómez
  • Nikolai Stähler
  • Janos Varga

Abstract

This paper presents a novel model comparison to examine the challenges posed by changes in carbon-intensive energy prices for monetary policy. The employed environmental monetary models 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. 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. The analysis also establishes that these models share large commonalities in their quantitative and qualitative results, while also pointing out cross-country differences.

Suggested Citation

  • Matthias Burgert & Matthieu Darracq Pariès & Luigi Durand & Mario Gonzalez & 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," BIS Working Papers 1313, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1313
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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
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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