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Fossil Fuel Price Shocks and CO2 Emissions: The Case of Spain

Jorge Blazquez, Jose Maria Martin-Moreno, Rafaela Perez, and Jesus Ruiz

Year: 2017
Volume: Volume 38
Number: Number 6
DOI: 10.5547/01956574.38.6.jmar
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Abstract:
This paper focuses on the impact of oil, natural gas and coal price shocks on the Spanish business cycle from 1969 to 2013. It uses Bayesian procedures to estimate a Dynamic Stochastic General Equilibrium (DSGE) model for a small open economy. The paper shows that natural gas and coal shocks are relevant sources of macroeconomic disruption in addition to oil price shocks. The three fossil fuel prices have an impact on the economic activity and explain the evolution of the energy mix. However, we find that oil price shocks have a significantly larger impact on economic volatility. Finally, we assess the impact of hydrocarbon price shocks on carbon emissions given that different price shocks result in a different fossil fuel mix and, thus, in different CO2 emissions.



Oil Price Shocks and Current Account Imbalances within a Currency Union

Timo Baas and Ansgar Belke

Year: 2023
Volume: Volume 44
Number: Number 4
DOI: 10.5547/01956574.44.4.tbaa
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Abstract:
For over two decades, current account imbalances have been an essential issue in the global policy debate as they threaten the world economy's stability. More recently, the government debt crisis of the European Union shows that internal current account imbalances of a currency union may also add to these risks. Moreover, oil price fluctuations and a contracting monetary policy that reacts to oil prices, previously discussed to affect the current account, may threaten the currency union by increasing internal imbalances. Therefore, this paper analyzes the oil price shock's impact on current account imbalances of a currency union with asymmetric labor market institutions. In this context, we show that oil price shocks can have a long-lasting effect on internal balances that the common monetary policy authority can reduce by choosing a core inflation target. Targeting core inflation, however, comes at the cost of lower production and higher unemployment. We show that these costs can be significantly reduced by increasing labor market flexibility.





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