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Europe > Ukraine

You are looking at 1 - 10 of 12 items for :

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Cover IMF Working Papers
Shocked: Electricity Price Volatility Spillovers in Europe
Serhan Cevik
and
Yueshu Zhao
European electricity markets are in the midst of unprecedented changes—caused by Russia’s invasion of Ukraine and the rise of renewable sources of energy. Using high-frequency data, this paper investigates volatility spillovers across 24 countries in the European Union (EU) during the period 2014–2024 to provide a better understanding of the transmission of risks in an international context. We develop both a static and a dynamic assessment of spillover effects and directional decomposition between individual countries. Our main findings show that about 73 percent of the forecast error variation is explained by cross-variance shares, which means only 27 percent can be attributed to shocks within each country. In other words, cross-border volatility spillovers dominate the behavior in national electricity markets in Europe—and this effect has grown over time. We also implement an augmented gravity model of bilateral volatility spillovers across power markets in the EU. Altogether, these results provide important insights to policymakers and regulators with regards to greater integration of electricity markets and infrastructure improvements that would also help with the transition to low-carbon sources of power generation and strengthen energy security in Europe.
Keywords:
Electricity prices; Volatility; Spillovers; Gravity model; Renewable energy; Electricity market reform; Europe; volatility spillover; spillover effect; markets in the EU; electricity market; Electricity; Gravity models
Cover IMF Working Papers
Medium-term Macroeconomic Effects of Russia’s War in Ukraine and How it Affects Energy Security and Global Emission Targets
Hugo Rojas-Romagosa
Russia’s war in Ukraine has disrupted the supply of natural gas for many European countries, triggering an energy crisis and affecting energy security. We simulate the medium-term effects of these trade disruptions and find that most European countries have limited GDP losses but those more dependent on Russian natural gas face moderate losses. European fossil fuel consumption and emissions are reduced and after accounting for the war impacts, achieving Europe’s emission targets becomes slightly less costly. In terms of energy security, the war eliminates European energy dependency from Russian imports, but most of the natural gas and oil imports will be substituted by other suppliers. We also find that constructing a new Russian pipeline to China does not provide significant macroeconomic benefits to either country.
Keywords:
Energy supply; energy security; trade disruptions; greenhouse gas emissions; computable general equilibrium; baseline share; w.r.t. baseline price; w.r.t baseline price; oil import; Natural gas sector; Imports; Exports; Electricity; Europe; Global
Cover IMF Staff Country Reports
Republic of Kosovo: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Republic of Kosovo
International Monetary Fund. European Dept.
This 2022 Article IV Consultation highlights that the increase in energy and food prices after Russia’s war in Ukraine is weighing on private demand, activity, and inflation in the Republic of Kosovo. Growth is projected to moderately pick up to 3.5 percent in 2023, and inflation to decline to 5 percent, though these forecasts crucially depend on the assumption that international commodity prices will ease. Uncertainty remains high, with risks to the downside for growth and to the upside for inflation. The budget for 2023 appropriately envisages a return to the fiscal rule deficit ceiling. While the financial sector has remained resilient through the pandemic and the war in Ukraine, the shifting macroeconomic outlook calls for further strengthening credit risk monitoring, accounting for bank-by-bank idiosyncratic risks and capacities and improving the surveillance of the housing market. Addressing infrastructure and governance gaps is essential to support new growth engines. Revitalizing the reform program requires strengthening coordination among and across all levels of government. Boosting green energy will increase energy security and decrease greenhouse gas emissions. Early withdrawals from the pension system should be avoided.
Keywords:
CBK balance sheet; banking sector assets; diaspora remittance; quarterly producer price index; banking industry; Kosovo diaspora; budget balance; energy sector strategy; Inflation; Energy prices; Electricity; Budget planning and preparation; Europe; Global
Cover IMF Working Papers
Chasing the Sun and Catching the Wind: Energy Transition and Electricity Prices in Europe
Mr. Serhan Cevik
and
Keitaro Ninomiya
European power markets are in the midst of unprecedented changes, with a record-breaking surge in energy prices.This paper investigates the impact of green power resources on the level and volatility of wholesale electricity prices at a granular level, using monthly observations for a panel of 24 European countries over the period 2014–2021 and alternative estimation methods including a panel quantile regression approach. We find that renewable energy is associated with a significant reduction in wholesale electricity prices in Europe, with an average impact of 0.6 percent for each 1 percentage points increase in renewable share. We also find evidence for a nonlinear effect—that is, higher the share of renewables, the greater its effect on electricity prices. On the other hand, while quantile estimation results are mixed with regards to the impact of renewables on the volatility of electricity prices, we obtain evidence that renewable energy has a negative effect on volatility at the highest quantiles. Overall, our analysis indicates that policy reforms can help accelerate the green transition while minimizing the volatility in electricity prices.
Keywords:
Energy transition; renewables; electiricity prices; panel quantile regression; Europe; electricity price; quantile estimation result; electricity generation; dampening effect; Electricity; Renewable energy; Renewable resources; Oil prices; Global
Cover IMF Working Papers
Governance and State-Owned Enterprises: How Costly is Corruption?
Ms. Anja Baum
,
Clay Hackney
,
Mr. Paulo A Medas
, and
Mouhamadou Sy
State-owned enterprises (SOEs) are present in key sectors of the economies around the world. While they can provide an important public service, there is widespread concern that their activities are negatively affected by corruption. However, there is limited cross-country analysis on the costs of corruption for SOEs. We present new evidence on how corruption affects the performance of SOEs using firm level data across a large number of countries. One striking result is that SOEs perform as well as private firms in core sectors when corruption is low. Taking advantage of a novel database reforms, we also show that SOE governance reforms can generate significant performance gains.
Keywords:
WP; operating profit; governance reform; current ratio; private firm; solid windowtext; SOE performance; SOE conditionality; firm-level indicators; SOE reform; construction firm; Corruption; Public enterprises; Electricity; Public expenditure review; Labor costs; Global
Cover IMF Staff Country Reports
Colombia: Technical Assistance Report-Reforming Energy Pricing
International Monetary Fund. Fiscal Affairs Dept.
Energy Subsidy Reform is a key pillar of Colombia’s national development plan. Rising fiscal challenges in Colombia—which have been exacerbated by the adjustment costs associated with recent large migration flows from Venezuela—can risk derailing the government from their commitment to meet both its headline deficit target of 2.4 percent in 2019 and its structural deficit target by 2022, under the existing fiscal rule. The government is committed to embark on a reform strategy that aims at safeguarding the fiscal framework. Energy subsidy reform is one element of the government’s strategy to address fiscal pressures. It is also consistent with efforts to enhance spending efficiency and free up additional fiscal resources for development needs, in line with the recommendations made by the expert commission on spending.
Keywords:
ISCR; CR; retail price; communication campaign; stabilization fund
Cover IMF Staff Country Reports
Colombia: Technical Assistance Report-Reforming Energy Pricing
International Monetary Fund. Fiscal Affairs Dept.
This paper on Colombia focuses on reforming energy pricing. Rising fiscal challenges in Colombia can risk derailing the government from their commitment to meet both its headline deficit target of 2.4 percent in 2019 and its structural deficit target by 2022, under the existing fiscal rule. The government is committed to embark on a reform strategy that aims at safeguarding the fiscal framework. Energy subsidy reform is one element of the government’s strategy to address fiscal pressures. Carefully designed reforms entail a gradual phasing out of subsidies in the case of fuel products and, in the case of electricity, an improvement in the targeting over the medium term. Illustrative simulations presented in this report highlight the fiscal and distributional impacts of different reform options. Simulations show that net fiscal gains could be achieved both for electricity and fuel products, while reducing distortions. The mission identified reform options to reduce energy subsidies while at the same time improve their targeting. The approach differs across sectors.
Keywords:
ISCR; CR; retail price; communication campaign; stabilization fund; price subsidy; government scenario; political economy; consumer price; communications strategy; supply cost; energy reform campaign; communication capacity; reference price; Energy subsidies; Fuel prices; Inflation; Electricity; Communications in revenue administration; South America; Caribbean; Global
Cover IMF Staff Country Reports
Former Yugoslav Republic of Macedonia: Selected Issues
International Monetary Fund
This Selected Issues paper for the former Yugoslav Republic of Macedonia is examined. Real GDP growth accelerated to 5 percent in 2007 and 6 percent in the first half of 2008, from its historical average of about 3 percent. Increased investment, partly financed by FDI, is the main driver boosting domestic demand, as seen in the fast-growing import of investment and intermediate goods. Simultaneously, the current account deficit has widened substantially since 2007 and has become a major concern for macroeconomic stability.
Keywords:
ISCR; CR; GDP; government; current account; deficit; price; production function; replacement ratio; FYR Macedonia; government policy; growth performance; government expenditure-to-GDP ratio; government operation; deficit target; government action; expenditure-to-GDP ratio; Real exchange rates; Electricity; Potential output; Public investment spending; Public investment and public-private partnerships (PPP); Eastern Europe; Global
Cover IMF Working Papers
Quasi-Fiscal Deficits and Energy Conditionality in Selected CIS Countries
Mr. Tapio Saavalainen
and
Joy Mylène ten Berge
Quasi-fiscal deficits of public utility companies are common in all member countries of the Commonwealth of Independent States (CIS). They constitute a significant impediment to efficient resource allocation and endanger macroeconomic stability. This paper presents a simple framework for measuring and monitoring such deficits and highlights their macroeconomic relevance. It reviews the progress under IMF conditionality aimed at correcting these imbalances during 1993-2003. The paper suggests that the extensive conditionality under the IMF-supported programs has yielded only limited progress in reducing the energy sector's financial imbalances. In conclusion, different policy options are discussed in light of the lessons learned.
Keywords:
WP; state capture; aluminum smelter; country authorities; state debt; trading company; Energy; quasi-fiscal deficit; transition; conditionality; governance; CIS country; enterprise restructuring; energy enterprise; government decree; General government cash deficit; nonviable enterprise; Tariffs; Energy sector; Electricity; Privatization; Europe; Central Asia
Cover IMF Staff Country Reports
Georgia: Selected Issues and Statistical Appendix
International Monetary Fund
The econometric results show that it is feasible to estimate robust price and inflation equations for Georgia. The long-term price equation expresses prices as a function of money, the exchange rate, and real income and may be interpreted as portraying equilibrium in the goods market. The paper also represents statistical data of transportation indicators, population and employment, personal income tax, monetary survey, average monthly wages, developments in commercial banking, interest rates, prudential indicators of commercial banks, balance of payments, and so on.
Keywords:
ISCR; CR; NPV; bank; ratio; debt service; U.S. Dollar exchange rate; revenue arrears; distribution company; tax arrears registration; land tax tax collection; Electricity; Energy sector; Commercial banks; Stress testing; Europe; Global