The Economic Effects of Energy Price Shocks

2008 ◽  
Vol 46 (4) ◽  
pp. 871-909 ◽  
Author(s):  
Lutz Kilian
Keyword(s):  
Stock Prices ◽  
Energy Demand ◽  
The United States ◽  
Economic Effects ◽  
Energy Price ◽  
Energy Prices ◽  
Price Shocks ◽  
Price Increases ◽  
New Energy ◽  
Key Issues

Large fluctuations in energy prices have been a distinguishing characteristic of the U.S. economy since the 1970s. Turmoil in the Middle East, rising energy prices in the United States, and evidence of global warming recently have reignited interest in the link between energy prices and economic performance. This paper addresses a number of the key issues in this debate: What are energy price shocks and where do they come from? How responsive is energy demand to changes in energy prices? How do consumer's expenditure patterns evolve in response to energy price shocks? How do energy price shocks affect U.S. real output, inflation, and stock prices? Why do energy price increases seem to cause recessions but energy price decreases do not seem to cause expansions? Why has there been a surge in the price of oil in recent years? Why has this new energy price shock not caused a recession so far? Have the effects of energy price shocks waned since the 1980s and, if so, why? As the paper demonstrates, it is critical to account for the endogeneity of energy prices and to differentiate between the effects of demand and supply shocks in energy markets when answering these questions.

ENERGY IN A MODEL OF FIRM ENTRY

2018 ◽  
Vol 24 (2) ◽  
pp. 231-254
Author(s):  
Soma Patra
Keyword(s):  
Negative Impact ◽  
The United States ◽  
Energy Price ◽  
Firm Entry ◽  
Energy Prices ◽  
Dsge Model ◽  
Price Shocks ◽  
Firm Level ◽  
Dynamic Stochastic ◽  
The Impact

Nine out of the last ten recessions in the United States have been preceded by an increase in the price of oil as noted by Hamilton [Palgrave Dictionary of Economics]. Given the small share of energy in gross domestic product this phenomenon is difficult to explain using standard models. In this paper, I show that firm entry can be an important transmission and amplifying channel for energy price shocks. The results from the baseline dynamic stochastic general equilibrium (DSGE) model predict a drop in output that is two times the impact in a model without entry. The model also predicts an increase in energy prices would lead to a decline in real wages, investment, consumption, and return on investment. Additionally, using US firm level data, I demonstrate that a rise in energy prices has a negative impact on firm entry as predicted by the DSGE model. This lends further support toward endogenizing firm entry when analyzing the effects of energy price shocks.

How do fossil energy prices affect the stock prices of new energy companies? Evidence from Divisia energy price index in China's market

Energy ◽  
2019 ◽  
Vol 169 ◽  
pp. 637-645 ◽  
Author(s):  
Chuanwang Sun ◽  
Dan Ding ◽  
Xingming Fang ◽  
Huiming Zhang ◽  
Jianglong Li
Keyword(s):  
Stock Prices ◽  
Price Index ◽  
Energy Price ◽  
Energy Prices ◽  
Fossil Energy ◽  
New Energy ◽  
Energy Companies

The Economic Effects of Energy Price Shocks

CFA Digest ◽  
2009 ◽  
Vol 39 (3) ◽  
pp. 37-39
Author(s):  
M.E. Ellis
Keyword(s):  
Economic Effects ◽  
Energy Price ◽  
Price Shocks

Food or Fuel—Will We Have to Choose?

Worldview ◽  
1981 ◽  
Vol 24 (2) ◽  
pp. 5-7
Author(s):  
Norman Rask
Keyword(s):  
The United States ◽  
High Energy ◽  
Agricultural Trade ◽  
Liquid Fuels ◽  
Energy Prices ◽  
Agricultural Resources ◽  
Policy Choices ◽  
Price Increases ◽  
Adequate Food ◽  
The U.S

Milton Freidman is said to have defined economics in its simplest form with the expression, “there is no such thing as a free lunch.” Recent energy price increases have raised the production cost of food, making that lunch even more expensive. In addition, high energy prices have created incentives for several countries to turn directly to agriculture as a source of energy, extracting alcohol from several crops, including sugar cane and corn. Continued political instability in the Middle East intensifies this interest in domestic alternatives to oil. But most countries do not have the agricultural ability to produce a significant portion of liquidfuel needs and still provide adequate food supplies. This raises concern about how agricultural resources should be used. The resulting food/fuel choice depends on a unique set of conditions in each country.The United States has a key role to play in both energy and food matters. The U.S. consumes almost a third of all petroleum produced in the world, imports almost 50 per cent of its domestic petroleum needs, and is the major exporter of agricultural products. The sheer magnitude of both the U.S.'demand for liquid fuels and its share of world agricultural trade makes U.S. policy choices on the food/fuel interface of critical importance domestically and in other areas as well.

scholarly journals The Effects of Rising Food and Fuel Costs on Poverty in Pakistan

2008 ◽  
Vol 13 (Special Edition) ◽  
pp. 117-138 ◽  
Author(s):  
Theresa Thompson Chaudhry ◽  
Azam Amjad Chaudhry
Keyword(s):  
Food Prices ◽  
Food Price ◽  
Energy Price ◽  
Price Shocks ◽  
Price Inflation ◽  
Fuel Prices ◽  
Price Increases ◽  
Head Count ◽  
The Impact ◽  
Poverty Levels

The dramatic increase in international food and fuel prices in recent times is a crucial issue for developing countries and the most vulnerable to these price shocks are the poorest segments of society. In countries like Pakistan, the discussion has focused on the impact of substantially higher food and fuel prices on poverty. This paper used PSLM and MICS household level data to analyze the impact of higher food and energy prices on the poverty head count and the poverty gap ratio in Pakistan. Simulated food and energy price shocks present some important results: First, the impact of food price increases on Pakistani poverty levels is substantially greater than the impact of energy price increases. Second, the impact of food price inflation on Pakistani poverty levels is significantly higher for rural populations as compared to urban populations. Finally, food price inflation can lead to significant increases in Pakistani poverty levels: For Pakistan as a whole, a 20% increase in food prices would lead to an 8% increase in the poverty head count.

Energy Justice Along the ‘New Silk Road’

2020 ◽  
pp. 122-136
Author(s):  
Anatole Boute
Keyword(s):  
Procedural Justice ◽  
Energy Supply ◽  
Regime Change ◽  
Energy Price ◽  
Financial Viability ◽  
Energy Prices ◽  
Price Increases ◽  
Domestic Courts ◽  
The World ◽  
Energy Justice

Central Asia holds massive energy reserves, but its energy systems are generally unreliable and inefficient. Although the region’s energy prices are amongst the lowest in the world, increasing prices to improve utilities’ financial situations and ensuring the urgently needed investments are made are issues of high social and political sensitivity. Popular discontent with tariff increases has already helped to trigger regime change in Kyrgyzstan in 2010. Given the sensitivity of energy price increases and tight budgetary constraints in the region, what legal options are available to restore utilities’ financial viability without jeopardizing the affordability of energy supply? Focusing on procedural justice, this chapter argues that domestic courts have an important role to play in balancing utilities’ right to cost-recovery tariffs and consumers’ rights to affordable energy supply.

scholarly journals The Impact of Energy Prices on Optimum Machinery Size and the Structure of Agriculture: A Georgia Example

1976 ◽  
Vol 8 (1) ◽  
pp. 205-211 ◽  
Author(s):  
Wesley N. Musser ◽  
Ulysses Marable
Keyword(s):  
Capital Structure ◽  
Energy Input ◽  
Farm Size ◽  
Energy Price ◽  
Energy Prices ◽  
Historical Trends ◽  
Farm Machinery ◽  
Price Increases ◽  
The Impact ◽  
Cost Components

In analyzing the impact of recent energy price increases on agriculture, agricultural economists have suggested the possibility of substitution of labor for farm machinery inputs [3, pp. 881-833] [17, pp. 195-196]. Since large energy input is embodied in farm machinery [14, p. 195], energy-price increases not only raised costs of machinery fuel, but also provided a cost-push effect on other fixed and variable machinery cost components. However, these potential price incentives have not been sufficient to reverse aggregate historical trends towards larger equipment in current machinery purchases [11, 15]. Understanding the nature of recent shifts in optimum machinery size on different farm sizes is important for consideration of future farm size and labor-capital structure of agriculture.

scholarly journals Food and Energy Price Shocks: What Other Prices Are Affected?

2011 ◽  
pp. 1-6
Author(s):  
Todd E. Clark ◽  
Saeed Zaman
Keyword(s):  
Commodity Prices ◽  
Commodity Price ◽  
Energy Price ◽  
Price Shocks ◽  
Price Increases ◽  
Consumer Prices ◽  
Commodity Price Shocks

Sharp rises in energy and other commodity prices have recently ignited concerns about inflation. Will these price increases spill over to other prices more generally? We study the typical responses of different price shocks and assess whether the recent behavior of producer and consumer prices is consistent with historical norms. Our analysis shows that the behavior of various producer and consumer prices since late 2009 has generally matched up with historical patterns. Overall, our findings suggest that effects of the recent energy and commodity price shocks on core consumer prices will be modest going forward.

scholarly journals The effects of energy price changes: heterogeneous welfare impacts and energy poverty in Indonesia

2018 ◽  
Vol 24 (2) ◽  
pp. 180-200
Author(s):  
Sebastian Renner ◽  
Jann Lay ◽  
Michael Schleicher
Keyword(s):  
Energy Demand ◽  
Energy Use ◽  
Price Change ◽  
Welfare Effects ◽  
Energy Price ◽  
Energy Prices ◽  
Energy Poverty ◽  
Welfare Impacts ◽  
Household Level ◽  
Energy Processing

AbstractWe study the welfare and energy poverty implications of energy price change scenarios in Indonesia. Our analysis extends previous analyses of energy price impacts at the household level in three ways. First, by employing a household energy demand system (QUAIDS), we are able to distinguish between first- and second-order welfare effects over the income distribution. Second, our results point to the ownership of energy-processing durables as another source of impact heterogeneity. Third, we extend the welfare analysis beyond the money-metric utility effects and look at energy poverty, which is understood as the absence of or imperfect access to reliable and clean modern energy services. The analysis indicates that energy prices may serve as an effective instrument to reduce energy use but also have important adverse welfare effects. The latter can, however, be mitigated by appropriate compensation policies.

Sign in / Sign up

Export Citation Format

Share Document