Role Of Energy Prices Research Articles

The stratified effect of extreme temperatures on birth weight: the role of energy prices

This paper fills a notable gap in the existing literature on birth outcomes and extreme temperatures by examining the causal moderating effect of energy prices on the impact of extreme temperatures during pregnancy on birth weight. It uses a sharp increase in energy prices that occurred in Spain in March 2021 as an identification strategy and incorporates a new weather dataset that increases the number of monitors from which temperature information is derived in previous research by more than sixfold. The results show that the negative effects of extreme temperatures on birth weight are amplified at higher energy prices, especially for mothers of lower socioeconomic status. By focusing on how energy prices moderate the impact of extreme temperatures on birth outcomes, opportunities arise for policy interventions aimed at reducing health inequalities at birth. Moreover, given the critical role that events in utero play in individuals’ later development, such policies have the potential not only to reduce health inequalities at birth, but also to address broader inequalities in long-term outcomes.

The Effects of Energy Commodities on CPI

From 2021-2023, the US saw a period of unparalleled inflation. Prompted by the debate on the role of energy prices, this paper investigates the role of rising energy commodities in this inflationary trend. Focusing on the Consumer Price Index (CPI-U), we explore the direct and indirect effects of energy commodity price changes. Despite the sector's 3-5% CPI weight, energy commodities exhibit significant volatility, contributing to 30% of monthly inflation fluctuations on average. The study identifies Gasoline and Fuel oil, both crude oil derivatives, as key components. Additionally, we assess the secondary pass-through effects, mainly through the transportation and industrial sectors. This research provides insights into the substantial impact of energy commodities on inflation and encourages further exploration on this topic, which can enhance economic forecasts and possibly monetary policy forecasts.

Declining real interest rates: The role of energy prices in energy importers

This study investigates whether the upward trend in real energy prices since the 1990s can account for the decreasing trend in real interest rates in energy-importing countries. By estimating dynamic panel data models, I first provide empirical evidence that a rise in real energy prices leads to falls in real interest rates and aggregate consumption in energy-importing OECD member countries. Using a life-cycle model, I show that the increasing trend in real energy prices decreased the equilibrium real interest rate by about 1.4 percentage points between 1990 and 2018. The mechanism for this effect is as follows: As a result of the increases in the real energy price, energy consumption falls, dampening the consumption of manufactured goods because of the complementarity in consumption between energy and manufactured goods. Accordingly, aggregate consumption declines, putting downward pressure on the real interest rate. Moreover, the increased real energy price decreases energy input in production, raising the capital/energy ratio and inducing a lower real interest rate via a fall in the marginal product of capital. Through a simulation, I also demonstrate that increases in the real energy price had a greater influence on the declining real interest rate in energy-importing countries during 1990–2018, compared to population aging.

Asymmetric Effects of Energy Inflation, Agri-inflation and CPI on Agricultural Output: Evidence from NARDL and SVAR Models for the UK

This paper investigates the effects of inflation in the UK energy, agriculture and consumer sectors on agricultural output, using monthly data between February 2015 and October 2022. Existing studies on agricultural inflation – agflation – explore the impact on economic activity vis-a-vis unemployment, consumption, interest rates and agricultural production. In this paper, we consider some of the causes of agflation, particularly the role of energy prices that are of great importance at the time of writing, to the supply of food. In addition, we consider the broader context of energy price fluctuations and uncertainty. Our approach adopts a Non-Linear Autoregressive Distributed Lag (NARDL), Structural Vector Auto Regression model (SVAR), including impulse response analysis. Our findings suggest the increase in energy inflation agflation and CPI, adversely affect agricultural output, while decreases in energy inflation, agflation and CPI positively affect agricultural output in the UK. These should be of significant interest to hedge fund managers, institutional investors and economic policymakers, particularly with regard to hedging and portfolio risk diversification strategies.

Role of green technologies, climate uncertainties and energy prices on the supply chain: Policy-based analysis through the lens of sustainable development

The volatility of energy financial markets significantly damages the behavior of the economy. Supply chain logistics is highly dependent on energy prices and climate change. We investigated the contribution of green technologies, economic policy uncertainty (EPU), climate policy uncertainty (CPU), and the role of energy prices in supply chain disruptions. The scope of this study was expanded to assess global supply chain disruptions in the context of recent geopolitical events. The authors employ quantile–quantile regression and Granger causality in quantile analysis using data covering May 2004 to April 2022. This timeframe allows us to understand global supply chain disruptions during recent economic and geopolitical events. Empirical results reveal the strong influence of green technologies, EPU, CPU, and energy prices on the global supply chain, confirming its strong dependence on these factors. In addition, it is evident that CPU is detrimental to the supply chain, hindering the achievement of a renewable/sustainable integrated logistics system. Results also show that macroeconomic uncertainty disrupts the seamless movement of goods and services along the supply chain. These conclusions are relevant for policymakers, institutions, and managers to achieve a sustainable and resilient supply chain system.

How energy prices shape OECD economic growth: Panel evidence from multiple decades

New fears about escalating fuel prices and accumulating inflation are raising concerns about the possible dimming of near-term prospects for world economic growth. The role of energy prices in shaping economic growth relates not only to geopolitical risks or environmental taxes but also to a range of strategies that place moratoria on primary energy sources like nuclear, coal, petroleum, and natural gas. Applying a new data set for country-level energy prices since 1960, this study evaluates the effects of energy prices on economic growth in 18 OECD countries by controlling for other important macroeconomic conditions that shape economic activity. Mean-group estimates that control for cross-country correlations are used to emphasize average responses across nations. Averaged across all nations, results suggest that a 10% increase in energy prices dampened economic growth by about 0.15%. Moreover, some evidence exists that this response may be larger for more energy-intensive economies.

The role of energy prices and economic growth in renewable energy capacity expansion – Evidence from OECD Europe

This paper presents an alternative perspective on the renewable energy-economic growth nexus from the lens of installed capacity. Twenty OECD countries in Europe are assessed using panel data methodologies with data period spanning from 1993 to 2018. Electricity generation share-weighted coal and natural gas price indexes are incorporated in explaining country differences in fossil fuel reliance. Compared to results obtained from unweighted price indexes, weighted energy price indexes seem vital in obtaining a more plausible description of the relationship between energy prices and renewable capacity growth. Our findings confirm the crucial role of economic growth for renewable energy capacity development and long-term causality is apparent. Results indicate coal price increases trigger a greater positive impact on renewable capacity than natural gas. Finally, climate policies that raise fossil fuels costs could potentially stimulate the addition of renewable capacity and expedite the transition to renewable energy through price effect.

The role of energy prices and non-linear fiscal decentralization in limiting carbon emissions: Tracking environmental sustainability

Since the role of fiscal decentralization cannot be overlooked in tracking sustainable development goals targets of a clean environment and climate mitigation, it is inevitable to understand the comprehensive picture of its link with environmental quality. Unlike past studies, this study investigates the combined influence of energy prices and non-linear fiscal decentralization on carbon emissions in the presence of institutional quality and gross domestic product in the model. It employed advanced econometric panel techniques on data from 1990 to 2018 for the top seven fiscally decentralized Organisation for Economic Co-operation and Development (OECD) nations, including Spain, Belgium, Austria, Switzerland, Germany, Australia, and Canada. The main outcomes are as follows: first, a cointegrating equilibrium link is existent among the study variables. Second, the linear term of fiscal decentralization promotes carbon emissions, while the non-linear term mitigates it. It verified the inverted U-shaped curve between fiscal decentralization and carbon emissions. Third, increasing energy prices for non-renewable energy decrease carbon emission due to a substitution effect. Among other explanatory variables, improvement in the quality of institutions decreases carbon emissions, while the gross domestic product increases it. These findings suggest strengthening fiscal decentralization, lowering non-renewable energy prices, and improving institutional quality to check the deteriorating environmental quality in the study sample and other worldwide regions.

Exchange rate pass‐through to restaurant and hotel prices in the United States: The role of energy prices and tourism development

This study incorporates energy prices and tourism development into the standard purchasing power parity doctrine to investigate exchange rate pass‐through to restaurant and hotel prices in the United States over the period 2001:Q4 to 2017:Q4. We apply the multiple structural breaks cointegration test and flexible autoregressive distributed lag (ARDL) method. Our empirical results provide evidence that exchange rate appreciation reduces restaurant and hotel prices while an increase in energy prices and tourism development causes the prices of restaurant and hotel to rise. However, the pass‐through of exchange rate, energy prices, and tourism development is incomplete in both the long‐ and short‐run with the long‐run pass‐through having a stronger effect. Furthermore, the causality results show that restaurant and hotel prices have predictive power for exchange rate. Causality between restaurant and hotel prices and tourism development has a feedback effect. We also find that exchange rate Granger causes not only energy prices but tourism development while tourism development causes energy prices. The policy implications for these results are carefully outlined in the study.

The role of energy prices in the Great Recession — A two-sector model with unfiltered data

We investigate the role of energy shocks during the Great Recession. We study the behaviour of the UK energy and non-energy intensive sectors firms in a real business cycle (RBC) model using unfiltered data. The model is econometrically estimated and tested by indirect inference. Output contraction during the Great Recession was largely caused by energy price and sector-specific productivity shocks, all of which are non-stationary and hence tend to dominate the sample variance decomposition. We also found that the channel by which the energy price shock reduces output in the model is via the terms of trade: these fall permanently when world energy prices increase and as substitutes for energy inputs are strictly limited there are few reactions via production channels. Therefore, there is no other way to balance the deteriorating current account than through lower domestic absorption.

Food prices, energy and climate shocks in Uganda

The objective of this paper is to examine the importance of energy and climate shocks in Uganda’s food price processes. The unique features of this paper are threefold: first, we identify climate shocks computed as the deviations of monthly temperature and rainfall realisations from their respective long term means. Second, controlling for external and domestic shocks, we examine the possible role of energy prices in food price processes. Third, we examine these issues in a single equation model exploiting cointegration techniques and general-to-specific methods. Results indicate that energy prices have a long run cointegrating relationship with food prices. In addition, temperature shocks are more important than rainfall shocks in explaining food price variability.

Capacity utilization and the effects of energy price increases in Japan

It is well known that the standard real business cycle (RBC) model with energy cannot generate the large drops in value added following the energy price increases in the 1970s, although previous empirical studies have confirmed the important role of energy prices. In this paper, endogenous capacity utilization is incorporated into an otherwise standard RBC model as an amplification mechanism. The simulated results show that the endogenous capacity utilization successfully generates the large contraction in value added observed in the Japanese data. It is also shown that the introduction of capacity utilization produces more realistic dynamics of total factor productivity.