A note on the role of monetary policy when natural gas supply is inelastic

  • This note argues that in a situation of an inelastic natural gas supply a restrictive monetary policy in the euro zone could reduce the energy bill and therefore has additional merits. A more hawkish monetary policy may be able to indirectly use monopsony power on the gas market. The welfare benefits of such a policy are diluted to the extent that some of the supply (approximately 10 percent) comes from within the euro zone, which may give rise to distributional concerns.

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Author:Alfons J. WeichenriederORCiDGND
Parent Title (English):SAFE working paper ; No. 360
Series (Serial Number):SAFE working paper series (360)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2022
Year of first Publication:2022
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2022/10/04
Tag:energy crisis; monetary policy; natural gas
Issue:28 September 2022
Page Number:10
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
JEL-Classification:E Macroeconomics and Monetary Economics / E5 Monetary Policy, Central Banking, and the Supply of Money and Credit / E52 Monetary Policy
Q Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Q3 Nonrenewable Resources and Conservation / Q31 Demand and Supply
Licence (German):License LogoDeutsches Urheberrecht