The Unassuming Economist

From a paper by Peterson K. Ozili:

“Contractionary monetary and fiscal policy jointly reduce CO₂ emissions in the regions of the Americas and Africa. Contractionary monetary and fiscal policy combined with higher renewable energy consumption jointly reduce CO₂ emissions in the regions of the Americas, Asia and Europe. Also, contractionary monetary and fiscal policy combined with higher institutional quality jointly reduce CO₂ emissions in African countries. Higher renewable energy consumption reduces CO₂ emissions in Africa, Asia, Europe and Americas regions while strong institutional quality consistently reduce CO₂ emissions in Europe and the Americas.”

From a paper by Florin Cornel Dumiter, Ștefania Amalia Nicoară, Samuel Nicoară, Cristian Bențe and Luminița Păiușan:

“The oil price influences and tendencies have gained, lately major developments both at the European level and on the international level. Moreover, several interconnections between the energy sector and oil price influences have become the panacea of several important research and studies. In this article, we provide a qualitative and quantitative approach to the interconnections manifested between oil price movements and the developments of the energy sector. The study is focused on Central and Eastern European Countries which have similarities and differences both at the energy sector level and economy level. The econometric techniques used in this study reveal the importance of the causality relationship between oil price movements and the energy sector taking into account the macroeconomic context. The conclusions of this study highlight some important fine-tuning aspects that must be recalibrated in Central and Eastern European Countries to increase the economic outcomes, strengthen the energy sector, and respond properly to the oil price movement trends.”

From a paper by David Amaglobeli, Joaquim Guilhoto, Samir Jahan, Salma Khalid, Raphael Lam, Gregory Legoff, Brent Meyer, Xuguang Simon Sheng, Pawel Smietanka, Sonya Waddell, and Daniel Weitz:

“The energy price shock in 2022 led to government support for firms in some countries, sparking debate about the rationale and the nature of such support. The results from nationally representative firm surveys in the United States and Germany indicate that firms in these countries were generally resilient. Coping strategies adopted by firms included the pass-through of higher costs to consumers, adjustment of profit margins (United States) and investments in energy saving and efficiency (Germany). Firms in energy-intensive industries would have been significantly more affected if international energy prices were fully passed through to domestic prices in Europe. Survey responses further reveal that most firms are uncertain about the impact of recent policy announcements on green subsidies. Firms take advantage of fiscal incentives to accelerate their climate-related investment plans are often those that have previous plans to do so. These findings suggest better targeting and enhancing policy certainty will be important when facilitate the green transition among firms.”

From a paper by Fernando Avalos, Ryan Niladri Banerje, Matthias Burgert, Boris Hofmann, Cristina Manea, and Matthias Rottner:

“Major price increases in energy and food were key drivers of the 2021–22 inflation surge. These large supply-driven commodity price increases, occurring when inflation was already elevated in many countries, increased the risk of moving to a high-inflation regime. Central banks have tended to look through commodity price fluctuations due to their often transitory nature and the implied trade-off between inflation and output stabilisation in the case of supply-driven price shocks. Growing geopolitical disruptions, climate change and a bumpy transition to green energy threaten to make commodity price shifts larger and more frequent going forward. This potentially raises greater risks for price stability, thereby limiting the scope for monetary policy to look through them.”

From a paper by Christopher Erceg, Marcin Kolasa, Jesper Linde, and Andrea Pescatori:

“Many countries have used energy subsidies to cushion the effects of high energy prices on
households and firms. After documenting the transmission of oil supply shocks empirically in the United States and the Euro Area, we use a New Keynesian modeling framework to study the conditions under which these policies can curb inflation. We first consider a closed economy model to show that a consumer subsidy may be counterproductive, especially as an inflation-fighting tool, when applied globally or in a segmented market, at least under empirically plausible conditions about wage-setting. We find more scope for energy subsidies to reduce core inflation and stimulate demand if introduced by a small group of countries which collectively do not have much influence on global energy prices. However, the conditions under which consumer energy subsidies reduce inflation are still quite restrictive, and this type of policy may well be counterproductive if the resulting increase in external debt is high enough to trigger sizeable exchange rate depreciation. Such effects are more likely in emerging markets with shallow foreign exchange markets. If the primary goal of using fiscal measures in response to spikes in energy prices is to shield vulnerable households, then targeted transfers are much more efficient as they achieve their goals at lower fiscal cost and transmit less to core inflation.”