Almost one year ago Turner Business reported on research that was conducted by Turner College economist Frank Mixon, along with colleagues Ján Buleca and Maryna Tatar of the Technical University of Košice, and Ermanno Affuso of the University of South Alabama, evaluating the effects of external shocks, primarily domestic armed conflicts, on the market equilibrium in residential energy and assesses their impact on consumer welfare. Since that time the study has undergone substantial revisions and is forthcoming in a future issue of Peace Economics, Peace Science and Public Policy. Their revised study utilizes a global, rather than local, exposure measure representing annual variation in realized armed conflict activity worldwide. This construction is aligned with the mechanism examined in the paper, according to which worldwide armed conflicts may affect open European energy markets through internationally integrated commodity markets, sanctions, shipping disruptions, insurance and financial risk premia, supply-chain risk, market expectations, and geopolitical uncertainty. Using annual panel data for 29 European countries over 1995–2021, the results continue to indicate that higher global conflict exposure is negatively and significantly associated with household energy supply. The authors also utilize an equilibrium-displacement model to translate this market response into consumer-welfare effects. In the short term, assuming a one-year dynamic adjustment, each additional armed conflict worldwide is associated with a consumer surplus loss of approximately EUR 11.1 million for a representative European country, with cumulative panel losses reaching approximately EUR 31 billion by 2021.
Comments
Post a Comment