Rapidly rising energy prices: does the driver of the energy market imbalance matter?

This paper uses a variant of the IMF 's Global Economy Model (GEM) to examine the macroeconomic impact of the rise in energy prices since end-2003 in the Euro area, the United Kingdom and the United Sates. The analysis illustrates how the GDP and inflation effects depends on the levels of energy use and energy production. The analysis also demonstrates how the macroeconomic effects depend on the factors driving higher energy prices. For example, if faster than expected growth in emerging Asia is important, then industrial countries receive some positive terms-of-trade effects that offset the negative GDP effects of permanently higher energy prices.