Since Russiaโ€™s invasion of Ukraine, many countries have pledged to end or restrict their oil and gas imports to curtail Moscowโ€™s revenues and hinder its war effort. Thus, the European ministers agreed to trigger a cap on the gas price. To detect the importance of the price cap for gas, we provide a mixture representation for the gas price to detect the presence of outliers made by a truncated normal distribution and a uniform one. We focus our analysis on Germany and Italy, which are major Russian gas importers by exploiting the response of the different commodities to a gas shock through a Bayesian vector autoregressive (VAR) model. As a result, including a lower gas price cap smooths the impact of a gas shock on electricity prices, while not considering a price cap will increase exponentially this impact.

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Citazione suggerita: F. Ravazzolo, L. Rossini, ‘Is the Price Cap for Gas Useful? Evidence from European Countries’, Nota di Lavoro 023.2033, Milano, Italy: Fondazione Eni Enrico Mattei

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