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

2007 ◽  
Vol 199 ◽  
pp. 114-125
Author(s):  
Jared Bebee ◽  
Ben Hunt
Keyword(s):  
Euro Area ◽  
Global Economy ◽  
Energy Use ◽  
Energy Prices ◽  
Industrial Countries ◽  
The United Kingdom ◽  
Tradable Sector ◽  
Macroeconomic Impact ◽  
Macroeconomic Implications ◽  
The Impact

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.

The macroeconomic impact of shocks to bank capital buffers in the Euro Area

2019 ◽  
Vol 20 (1) ◽  
Author(s):  
Derrick Kanngiesser ◽  
Reiner Martin ◽  
Laurent Maurin ◽  
Diego Moccero
Keyword(s):  
Euro Area ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Decomposition Analysis ◽  
Bank Lending ◽  
Empirical Literature ◽  
Bank Capital ◽  
Macroeconomic Impact ◽  
The Global Financial Crisis ◽  
The Impact

Abstract While the global financial crisis revealed a need for macroprudential policy tools to mitigate the build-up of risk in the financial system, the impact of such policies on the banking sector and the macroeconomy remains largely uncertain. We contribute to the empirical literature that estimates the impact of shocks to bank capital buffers on bank lending and the macroeconomy by estimating a Bayesian VAR model identified with sign restrictions. We use bank-level data for large euro area listed banks to construct an aggregate bank capital buffer for the euro area, which is included as another variable in the model. We estimate three shocks affecting the euro area economy, namely a demand shock, a monetary policy shock and a shock to bank capital buffers. We find that banks curtail lending and reduce their relative exposure to riskier assets in response to a shock to the bank capital buffer. Historical shock decomposition analysis shows that shocks to bank capital buffers have contributed to impair bank lending growth and to widen bank lending spreads, hence depressing economic activity.

scholarly journals The Impact of Hard Brexit on Polish Exports

2018 ◽  
Vol 54 (2) ◽  
pp. 99-109
Author(s):  
Jakub Borowski ◽  
Jakub Olipra ◽  
Paweł Błaszyński
Keyword(s):  
Economic Integration ◽  
Global Economy ◽  
Interesting Case ◽  
First Year ◽  
The European Union ◽  
Trade Relations ◽  
The United Kingdom ◽  
The Uk ◽  
The Impact ◽  
The Eu

Abstract The decision of the United Kingdom (UK) to leave the European Union (EU) is unprecedented, especially considering the recent trend in the global economy toward economic integration. There is a multitude of research concerning the implications of economic integration; however, research in the field of disintegration is scarce. Brexit serves as an interesting case study to investigate the effects of economic disintegration. The implications for trade are especially fascinating as trade liberalization is one of the most important benefits of economic integration. Existing studies focus mainly on Brexit’s impact on the UK’s exports and imports, while less attention has been paid to Brexit’s effects on the trade of other countries. The main objective of our research is to estimate Brexit’s influence on Polish exports. We present several possible scenarios of future trade relations between the UK and the EU and assume that, at least in the nearest-future post-Brexit scenario, trade under the World Trade Organization rules is most likely. This will result in the imposition of tariffs on trade between the UK and the EU members, including Poland. In our research, we used the real exchange rate of the Polish zloty against the British pound as a proxy for the changes in price competitiveness of Polish exports due to the imposition of tariffs. We find that in the first year after Brexit, the dynamics of Polish exports to the UK will decrease due to the imposition of customs duties by 1.3 percentage points (pp) and by 0.1 pp when it comes to total Polish exports. This paper contributes to the discussion on the effects of disintegration on trade. We propose a new method for assessing changes in trade volume due to increase of trade barriers.

Export pricing and the macroeconomic effects of US import tariffs

2018 ◽  
Vol 244 ◽  
pp. R39-R45 ◽  
Author(s):  
Ulf D. Slopek
Keyword(s):  
Export Prices ◽  
Traded Goods ◽  
Long Run ◽  
The Us ◽  
Exchange Rate Movements ◽  
Macroeconomic Impact ◽  
Short Run ◽  
Macroeconomic Effects ◽  
Macroeconomic Implications ◽  
The Impact

We modify NiGEM in order to study the macroeconomic effects of imposing import tariffs in the US under different assumptions regarding the long-run price setting behaviour of exporters. Overall, the macroeconomic implications in the US resemble the impact of a cost shock or adverse supply shock as prices increase while output declines. Due to exchange rate movements and changes in the prices of traded goods, prices and output in other economies tend to move in the same direction. We demonstrate that the size and persistence of the macroeconomic impact following the introduction of new tariffs critically hinge upon the specific assumptions underlying the behaviour of export prices. If foreign exporters are concerned about their net-of-tariff prices, there will be little adjustment after the initial surge in tariff-inclusive export prices. As a result, the adverse macroeconomic impact will be large and persistent both in the US and abroad. While additional government spending financed by tariff revenues could mitigate the adverse impact on the protectionist economy in the short run, retaliation by its trading partners would worsen the outcome. Our simulations also raise doubts about the ability of protectionist measures to rein in global imbalances.

scholarly journals Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine

2021 ◽  
Vol 18 (1) ◽  
pp. 151-164
Author(s):  
Tetiana Bogdan ◽  
Vitalii Lomakovych
Keyword(s):  
Economic Growth ◽  
Global Economy ◽  
External Debt ◽  
Foreign Direct Investments ◽  
External Shocks ◽  
Domestic Investment ◽  
Credit System ◽  
Boom And Bust ◽  
Macroeconomic Implications ◽  
The Impact

The acceleration of the global economy’s financialization with the spread of the COVID-19 pandemic highlights the risks of financial markets volatility, boom and bust cycles, violation of price stability, and debt sustainability. In such conditions, the high degree of Ukraine economy’s external openness, significant amounts of external debt, and lack of domestic investment and credit resources raise the issue of external financial threats to the national economy. This study aims to identify the risks of financialization and debt accumulation across the globe, specify protective arrangements and vulnerabilities of Ukraine’s credit system to external shocks and develop a set of policy actions for global risks mitigation in Ukraine. To achieve this goal, available theoretical sources and policy studies were reviewed, and international databases of financial indicators have been analyzed. As a result, the underdevelopment of the financial system in Ukraine and insufficient use of the credit levers by the private sector are revealed, which impede economic growth but simultaneously mitigate the impact of external shocks in Ukraine’s economy. On the other hand, high external debt reliance is confirmed, which increases the risks of financialization and cross-border capital flows for Ukraine’s economy. A set of financial and organizational measures (targeted at eliminating credit and debt distortions in Ukraine and creating a financial basis for sustainable economic growth) are devised; they refer to development of the national capital market, fiscal policy adjustment, acceleration of the foreign direct investments inflows, shifts in the NBU’s monetary policy, and the management of foreign exchange reserves.

scholarly journals Energy and Economic Growth in Pakistan

2004 ◽  
Vol 43 (2) ◽  
pp. 175-200 ◽  
Author(s):  
Rehana Siddiqui
Keyword(s):  
Economic Growth ◽  
Energy Conservation ◽  
Growth Process ◽  
Energy Use ◽  
Petroleum Products ◽  
Energy Prices ◽  
Reverse Causality ◽  
Alternative Sources ◽  
The Impact ◽  
Energy Expansion

Recent rise in energy prices, shrinking existing resources, and the search for alternative sources of energy and energy conservation technologies have brought into focus the issue of causality between energy use and economic growth. The results of this study show that energy expansion is expected to lead to higher growth and its shortage may retard the growth process. The impact of all sources of energy on economic growth is not the same. The impact of electricity and petroleum products as well as that of electricity only is high and statistically significant. However, the reverse causality is critical for the petroleum products.

Global Pandemics on European Electrical Energy Markets

2021 ◽  
Vol 10 (3) ◽  
pp. 24-46
Author(s):  
Mariusz Piotr Drabecki ◽  
Klaudia Brygida Kułak
Keyword(s):  
Electrical Energy ◽  
Energy Markets ◽  
High Impact ◽  
Market Condition ◽  
Power Demand ◽  
Energy Prices ◽  
Share Prices ◽  
Empirical Survey ◽  
The United Kingdom ◽  
The Impact

Global pandemics cause crises influencing all branches of economies. Basing on the currently striking COVID-19 pandemic, the authors analyze in this paper to what extent they may impact selected European electrical energy markets. For this, this research performs an empirical survey of the evolution of three market condition indicators: power demand, day-ahead energy prices, and prices of shares of power companies active in the generation sector. These are analyzed on examples of four European countries that all reacted differently to the spreading epidemic at governmental level: Italy, the United Kingdom, Poland, and Sweden. The evolution of indicators is analyzed for the period of COVID-19 outbreak in Europe, from January 27th 2020 until May 27th 2020 and checked with their behaviors in previous periods of time statistically. The study showed that global pandemics may have high impact on power demand and on share prices of power companies. Yet, the impact on day ahead energy prices is less evident and seems not present.

Northern EU countries may lose influence post-Brexit

2016 ◽  
Keyword(s):  
United Kingdom ◽  
Euro Area ◽  
European Countries ◽  
Content Type ◽  
Eu Countries ◽  
The United Kingdom ◽  
Northern European ◽  
Inner Circle ◽  
The Impact ◽  
The Eu

Subject The impact of Brexit on northern European countries. Significance The United Kingdom's vote to leave the EU presents a particular challenge to northern EU countries -- some of which are, like the United Kingdom, not members of the euro-area -- as they will lose a powerful ally for a more competitive, fiscally disciplined and globally oriented EU. Impacts Brexit could accelerate a closer economic, financial and fiscal integration of the euro-area, which many non-euro-area capitals oppose. Brexit could widen the gap between an 'inner circle' of euro-area members and a periphery of non-euro ones. The loss of UK contributions to the EU budget means that the burden shouldered by northern EU countries, all net contributors, will rise.

U.K. Inflation and Relative Prices over the 1997 to 2006 Period: How Important was Globalization?

2009 ◽  
Vol 9 (3) ◽  
pp. 1850177
Author(s):  
Benjamin L. Hunt
Keyword(s):  
United States ◽  
United Kingdom ◽  
Euro Area ◽  
Global Economy ◽  
The United States ◽  
Relative Importance ◽  
Relative Prices ◽  
The United Kingdom ◽  
Number Of Factors ◽  
Specific Factors

In this paper, the IMF's new Global Economy Model (GEM) is used to estimate the relative importance of a number of factors argued to explain the differences in the trends in core inflation and relative prices in the United Kingdom, the Euro area and the United States. The simulation results indicate that although the direct effect of globalization has had a larger effect in the United Kingdom than in either the United States or the Euro area, it explains only a portion of how the developments and U.K. specific factors played an important role.

The euro and prospects for growth in Europe

2008 ◽  
Vol 204 ◽  
pp. 22-32
Keyword(s):  
Euro Area ◽  
High Energy ◽  
Subprime Crisis ◽  
Energy Prices ◽  
Real Gdp ◽  
The Us ◽  
European Banks ◽  
Growth Prospects ◽  
Pass Through ◽  
The Impact

In 2008 and 2009, real GDP growth in the Euro Area is forecast to settle in the 1½–1¾ per cent range, ¼ to ½ percentage points less than expected in January. The downward revision in part reflects the downgrading in world growth prospects, in particular for the US. Recent economic indicators for Euro Area countries indeed remain relatively favourable. The most recent early indicators available for the start of 2008 are also conducive to moderate optimism. At around 2½ per cent for HICP both in 2008 and 2009, inflation projections are a little above the January forecast due to the pass-through of higher oil prices on domestic costs. The impact of energy prices on overall inflation has however been mitigated by the euro's continued appreciation, which has also contributed to prospects for slower growth. The main downside risks to the current forecast are linked to the high energy prices and to how European banks will respond to spillovers from the US subprime crisis.

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