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

Author/Editor:

Silvia Albrizio ; John C Bluedorn ; Christoffer Koch ; Andrea Pescatori ; Martin Stuermer

Publication Date:

July 19, 2022

Electronic Access:

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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.

Summary:

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.

Series:

Working Paper No. 2022/143

Frequency:

regular

English

Publication Date:

July 19, 2022

ISBN/ISSN:

9798400215223/1018-5941

Stock No:

WPIEA2022143

Pages:

39

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