IMF Working Papers

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

By David Amaglobeli, Joaquim Guilhoto, Samir Jahan, Salma Khalid, Waikei R Lam, Gregory M Legoff, Brent Meyer, Xuguang Simon Sheng, Pawel Smietanka, Sonya Waddell, Daniel Weitz

February 9, 2024

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David Amaglobeli, Joaquim Guilhoto, Samir Jahan, Salma Khalid, Waikei R Lam, Gregory M Legoff, Brent Meyer, Xuguang Simon Sheng, Pawel Smietanka, Sonya Waddell, and Daniel Weitz. Firms’ Resilience to Energy Shocks and Response to Fiscal Incentives: Assessing the Impact of 2022 Energy Crisis, (USA: International Monetary Fund, 2024) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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

Publication Details

  • Pages:

    23

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2024/027

  • Stock No:

    WPIEA2024027

  • ISBN:

    9798400263149

  • ISSN:

    1018-5941