Firms’ Resilience to Energy Shocks and Response to Fiscal Incentives: Assessing the Impact of 2022 Energy Crisis

26 Pages Posted: 14 Feb 2024

See all articles by David Amaglobeli

David Amaglobeli

International Monetary Fund (IMF)

Joaquim Guilhoto

University of Sao Paulo; Organization for Economic Co-Operation and Development (OECD) - Directorate for Science, Technology and Industry (STI)

Samir Jahan

International Monetary Fund (IMF)

Salma Khalid

International Monetary Fund (IMF) - Fiscal Affairs Department

Raphael Lam

International Monetary Fund (IMF)

Gregory Legoff

International Monetary Fund (IMF)

Brent Meyer

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Xuguang Simon Sheng

American University - Department of Economics

Pawel Smietanka

Deutsche Bundesbank

Sonya Waddell

Federal Reserve Banks - Federal Reserve Bank of Richmond

Daniel Weitz

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Abstract

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 announcments 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.

Keywords: Energy prices, Subsidies, Survey, Cost-Push Model, Input Output Table, Firm Behavior

JEL Classification: H20, H32, E31, D57

Suggested Citation

Amaglobeli, David and Guilhoto, Joaquim José Martins and Guilhoto, Joaquim José Martins and Jahan, Samir and Khalid, Salma and Lam, W. Raphael and Legoff, Gregory and Meyer, Brent and Sheng, Xuguang Simon and Smietanka, Pawel and Waddell, Sonya and Weitz, Daniel, Firms’ Resilience to Energy Shocks and Response to Fiscal Incentives: Assessing the Impact of 2022 Energy Crisis. IMF Working Paper No. 2024/027, Available at SSRN: https://ssrn.com/abstract=4726355 or http://dx.doi.org/10.5089/9798400269356.001

David Amaglobeli (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Joaquim José Martins Guilhoto

University of Sao Paulo ( email )

Av. Prof. Luciano Gualberto, 908
FEA2
Sao Paulo, 05508-010
Brazil
+ 55 011 3091-5870 (Phone)
+ 55 011 3813-4743 (Fax)

Organization for Economic Co-Operation and Development (OECD) - Directorate for Science, Technology and Industry (STI) ( email )

Paris
France

Samir Jahan

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Salma Khalid

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

W. Raphael Lam

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Gregory Legoff

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Brent Meyer

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Xuguang Simon Sheng

American University - Department of Economics ( email )

4400 Massachusetts Avenue, N.W.
Washington, DC 20016-8029
United States

HOME PAGE: http://https://www.american.edu/cas/faculty/sheng.cfm

Pawel Smietanka

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Sonya Waddell

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Daniel Weitz

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

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