On curbing the rise in energy prices: An examination of different mitigation approaches

Arbeitspapier

The dependency on imported essential production inputs poses a threat of abrupt price hikes and shortages, potentially triggered by political events. The energy crisis resulting from the Russian war of aggression is an example. This paper investigates whether governments should bolster production via transfers or cost subsidies in the event of a crisis, utilizing a dynamic multi-sector economic model that is calibrated to Germany and incorporates endogenous firm entry and exit. Our findings suggest that subsidizing production costs is more beneficial for economic activity and welfare, provided the energy demand due to the subsidy does not significantly influence the price of the essential production input. If it does, this approach could become exceedingly expensive. In such scenarios, it is economically more efficient to provide lump-sum transfers to firms. The effectiveness of these policies ultimately hinges on their impact on the price of the imported input.

Angaben zum Objekt

• ISBN: 978-3-95729-982-6
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Deutsche Bundesbank Discussion Paper ; No. 09/2024

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Fluctuations; Cycles ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Fiscal Policy ; Fiscal Policies and Behavior of Economic Agents: Firm ; Environmental Economics: Government Policy
• Thema: Dynamic General Equilibrium Model ; Input-Output Matrix ; Energy crisis ; Gas Price Brake

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Hinterlang, Natascha ; Jäger, Marius ; Stähler, Nikolai ; Strobel, Johannes
• Ereignis: Veröffentlichung
• (wer): Deutsche Bundesbank
• (wo): Frankfurt a. M.
• (wann): 2024

Weitere Informationen

• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ