{
  "title": "Targeted, Implementable, and Practical Energy Relief Measures for Households in Europe",
  "publication": "IMF Working Papers, December 16, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/12/17/targeted-implementable-and-practical-energy-relief-measures-for-households-in-europe-526980",
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  "summary": "The recommended way of helping households during the ongoing European energy crisis is to allow price signals to operate freely while providing targeted compensation to the vulnerable.",
  "sections": [
    {
      "heading": "Summary and framing",
      "content": "- Recommended approach: allow price signals to operate freely while providing targeted compensation to the vulnerable.\n- Observed practice: institutional, political, and technical constraints have led many European governments to adopt broad, price-suppressing measures.\n- Consequences of broad price-suppressing measures:\n  - impede the adjustment in demand,\n  - have high fiscal costs,\n  - widen cross-country gaps in prices.\n- Focus of the paper: easy-to-implement, second-best policies."
    },
    {
      "heading": "Key findings",
      "content": "- Simple, implementable options that improve on current policy design include:\n  - bonuses or rebates on energy bills that are not linked to the current volume of consumption,\n  - block tariffs.\n- To avoid stoking inflation, fiscal policy should not add to aggregate demand; relief for energy bills should be targeted and coupled with offsetting fiscal measures.\n- One offsetting option presented: reclaim the relief from the better-off through income taxation, which would also make support more progressive."
    },
    {
      "heading": "Policy recommendations (practical implications)",
      "content": "- Prioritize targeted compensation to vulnerable households rather than broad, price-suppressing interventions.\n- Implement bonuses or rebates on energy bills that are independent of current consumption volume as a simple, second-best option.\n- Consider block tariffs as another straightforward design that can improve outcomes relative to broad price caps or subsidies.\n- Pair energy-bill relief with offsetting fiscal measures to avoid adding to aggregate demand and stoking inflation.\n- Use income taxation to reclaim relief from higher-income households to increase progressivity of support."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects: Consumption, Economic sectors, Energy prices, Energy pricing, Expenditure, Income, National accounts, Natural gas sector, Prices\n- Keywords: Consumption, distributional analysis, energy cost support measure, energy prices, Energy pricing, EU government, Europe, household incidence, I. consumer energy price inflation, Income, Natural gas sector, price pass-through, price signal, price-suppressing measure, social safety nets\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/12/17/targeted-implementable-and-practical-energy-relief-measures-for-households-in-europe-526980"
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    "Authors: Nicolas Arregui, Oya Celasun, Dora M Iakova, Aiko Mineshima, Victor Mylonas, Frederik G Toscani, Yu Ching Wong, Li Zeng, Jing Zhou",
    "Published: December 16, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400227400.001",
    "Recommended approach: allow price signals to operate freely while providing targeted compensation to the vulnerable.",
    "Observed practice: institutional, political, and technical constraints have led many European governments to adopt broad, price-suppressing measures.",
    "Consequences of broad price-suppressing measures:",
    "Focus of the paper: easy-to-implement, second-best policies.",
    "Simple, implementable options that improve on current policy design include:",
    "To avoid stoking inflation, fiscal policy should not add to aggregate demand; relief for energy bills should be targeted and coupled with offsetting fiscal measures.",
    "One offsetting option presented: reclaim the relief from the better-off through income taxation, which would also make support more progressive.",
    "Prioritize targeted compensation to vulnerable households rather than broad, price-suppressing interventions.",
    "Implement bonuses or rebates on energy bills that are independent of current consumption volume as a simple, second-best option.",
    "Consider block tariffs as another straightforward design that can improve outcomes relative to broad price caps or subsidies.",
    "Pair energy-bill relief with offsetting fiscal measures to avoid adding to aggregate demand and stoking inflation.",
    "Use income taxation to reclaim relief from higher-income households to increase progressivity of support.",
    "Subjects: Consumption, Economic sectors, Energy prices, Energy pricing, Expenditure, Income, National accounts, Natural gas sector, Prices",
    "Keywords: Consumption, distributional analysis, energy cost support measure, energy prices, Energy pricing, EU government, Europe, household incidence, I. consumer energy price inflation, Income, Natural gas sector, price pass-through, price signal, price-suppressing measure, social safety nets",
    "**Working Paper**"
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