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The impact of sustained high oil prices on the European economy

ICEG European Center, the Vienna Institute for International Economic Studies (wiiw) and GKI Energy Research & Consulting prepared a study in summer 2007 on the impact of sustained high oil prices on the European economy. The research was commissioned by the European Parliament (Committee of International Trade). The study analysed the effects of oil prices on economic growth, inflation, foreign trade and commodity prices. It demostrated how the economy adjust to high oil prices through (among others) corporate supply chains, relocation of production, fuel substitution and energy efficiency. As these spontaneous reactions are hindered by market imperfections, the study recommends policy action to facilitate adjustment. It focuses on potential trade policy responses on the EU level, including multi- and bilateral trade talks (including the Doha Development Agenda), trade defence instruments, international investment promotion. The study also touches upon the relationship between international trade and climate change.

The results of the research were presented at the hearing of the Committee of International Trade in Brussels on 21 November 2007. ICEG European Center also published a shorter, Hungarian version of the research report in its Vélemény series, focusing on Hungarian policy issues. This paper was discussed at an expert workshop in Budapest on 15 November 2007.

(Pellényi Gábor - The Impact of Sustained High Oil Prices on Trade Flows)

Further information: Pellényi Gábor (gpellenyi@icegec.hu).