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The Macroeconomic Effects of Energy Purchases

  • Carlo Di Maio
Chapter
Part of the Lecture Notes in Energy book series (LNEN, volume 16)

Abstract

Purpose

To assess whether the switch in energy source and/or the associated change in trade partners affect the Euro–Dollar exchange rate and how the countries react strategically, adjusting their energy policy.

Approach

Dynamic partial equilibrium model.

Findings

First, the effect of the energy purchases on the exchange rate dynamics ultimately depends on the preferences over assets and goods of the supplier countries. Second, the import preferences of the energy exporters are what determine the long-run impact of the oil and gas purchases. Therefore, when energy producers have different preferences, switching the supplier or the source can clearly alter the impact on the exchange rate.

Value

An analysis of the strategic interaction on the energy markets under the assumption that all assets are not perfect substitutes.

Keywords

Euro–Dollar exchange rate Strategic interaction Preferences Trade partners Energy sources substitutability 

References

  1. Dornbusch R (1976) The theory of flexible exchange rate regimes and macroeconomic policy. Scand J Econ 78(2):255–275CrossRefGoogle Scholar
  2. European Commission (2000) Towards a European strategy for the security of energy supply. COM(2000)769. Brussels, BelgiumGoogle Scholar
  3. Kouri P (1983) Intertemporal balance of payments equilibrium and exchange rate determination. Banca d'Italia. Discussion papers on international economics and finance, Rome, ItalyGoogle Scholar
  4. Kouri P, de Macedo J (1978) Exchange rates and the international adjustment process. Brookings Pap Econ Act 1978(1):111–157CrossRefGoogle Scholar
  5. Krugman P (1980) Oil and the dollar. NBER working paper series, 554, Cambridge, MAGoogle Scholar

Copyright information

© Springer-Verlag London 2013

Authors and Affiliations

  1. 1.Deutsche Bank S.p.A.MilanItaly

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