Juan Carlos Ciscar, Peter Russ, Leonidas Parousos , and Nikos Stroblos (2004) "Vulnerability of the EU Economy to Oil Shocks: a General Equilibrium Analysis with the GEM-E3 Model"
This paper presents a comparative statics analysis of the potential impact of oil price rises on the EU economy. The macroeconomic and sectoral effects of such oil shocks are quantitatively assessed for two basic scenarios with the GEM-E3 world model. The first scenario assumes a crisis leading to an increase of 10$ per barrel of oil. The second one consists of a much deeper energy crisis, and translates into a rise of 30$ per barrel of oil. The crude petroleum, petroleum refineries and energy-intensive sectors undergo a significant fall in their value-added. Almost 40% of the overall GDP fall comes from the Other market service sector, while the Trade and Transport sector and the Other equipment goods sector represent each approximately 10% of the overall GDP fall. The GDP losses for the EU as a whole are 0.94% in the first scenario and 2.56% in the second. The macroeconomic impact is slightly lower in the USA (0.81% and 2.21%, respectively). Australia, the FSU, India and Japan have very similar losses to that of the whole EU, while China and Africa experience a bigger GDP drop. The world GDP loss figures are very similar to those of the EU.
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