Energy, pandemics, and urban economics: cost-of-living differences between European cities

Abstract

ABSTRACT The recent surge of energy prices has started a global revival of inflation. This study sheds light on the determinants influencing living costs across 73 European cities between 2014–2022. Focusing on relative prices between analysed cities, we assess the importance of fundamental variables, such as GDP per capita, as well as crisis-specific variables, including energy prices and covid-related measures. Our findings underscore the significance of the Penn effect, highlighting that wealthier cities exhibit higher living costs. Furthermore, energy variables, especially heating needs and gas prices, show profound impact on city-level living costs, while the Covid period provides insights into the role of covid cases and governmental responses.