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Market Size and Supply Disruptions: Sharing the Pain of a Potential Russian Gas Shut-off to the European Union
Author:
Silvia Albrizio null

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Mr. John C Bluedorn
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Mr. Christoffer Koch null

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Mr. Andrea Pescatori
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Martin Stuermer
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 143
Language:
English
Publication Date:
19 Jul 2022
DOI:
https://doi.org/10.5089/9798400215223.001
ISBN:
9798400215223
ISSN:
1018-5941
Pages:
39
Keywords:
Supply disruptions; commodities; natural gas; energy; international trade; sanctions; spillovers; LNG importer; supply-side effects on European Union; supply disruption; market size; LNG market; Natural gas sector; Supply shocks; Demand elasticity; Fuel prices; Consumption; Global; Europe; EU country; EU consumption; EU gas; price effect
Legal-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.
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We assess the supply-side effects on European Union (EU) economic activity if Russian gas imports were to suddenly cease. Unlike other studies, we account for the global scope of the liquefied natural gas (LNG) market. In the absence of frictions, an open-economy, multi-sector general equilibrium model suggests that the adverse economic impact on the EU shrinks five-fold if integration with the global LNG market is considered. While greater integration provides a buffer for the EU through trade, the flip side is that other LNG importers (such as Japan, South Korea, and Pakistan) see adverse effects from higher prices.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund