Distributional impact of energy price measures

Overview

This research programme aims at assessing the fiscal and distributional impacts of energy price measures introduced in many European countries from 2022 onward to mitigate energy price hikes and their effects on households’ incomes.  

Model

The main tool of analysis is EUROMOD – the EU tax-benefit microsimulation model - and its consumption taxes (CT). Although the CT was designed to model consumption taxes reforms, the flexibility of the EUROMOD model allows to easily expand its functionality to include modeling of inflation as well as exceptional measures such as price caps, energy bill’s discounts and lump-sum energy transfers.  

Research

Combining microsimulation analysis with energy price forecasts allows us to compare the impact of the inflationary shock with and without energy price interventions across the income distribution. 

We can identify who is more likely to be severely affected by the price shock and evaluate which energy price intervention is more cost efficient in shielding vulnerable households from:

•  increasing inequality,
• losses of purchasing power and
• increasing risk of income and energy poverty.  

Documentation