Research project "Monetary Policy and Energy Prices"
Cooperation project between the Chair of Macroeconomics and the Vienna Institute for International Economic Studies on the impact of monetary policy and energy prices. The project is funded by the European Macro Policy Network (EMPN), an international research network headed by the Dezernat Zukunft.
The project develops well-founded statements based on the state of scientific knowledge on two current economic policy problems. On the one hand, the project considers the effect of (conventional) monetary policy on output, prices and employment and, on the other hand, the effect of energy price changes on consumption and related CO2 emissions.
Winner of the SaxFDM Open Data Award 2025
Context
There is an extensive empirical literature on the effects of policy rate changes on macroeconomic variables. The effects found in the individual studies are widely scattered and, in some cases, contradict each other. In this context, the project examines the overall empirical effects of conventional monetary policy shocks on output, prices and employment.
Our meta-study sets new standards for transparency and reproducibility by documenting and publicly releasing the entire research process, from preregistration through the literature search and data extraction to the final analysis.
In our comprehensive research synthesis, we examine the extent to which p-hacking, publication bias, as well as different identification strategies and other study characteristics in the heterogeneous literature influence the results. Using modern meta-analytic methods, we estimate bias-corrected average macroeconomic effects of conventional monetary policy.
Beyond the relevance of our findings for central banks and economic policy institutions, our project also provides an empirical benchmark for the further development of macroeconomic models.
Research Papers:
The inflated effects of conventional monetary policy on output and prices
Enzinger, M., Gechert, S., Heimberger, P., Prante, F. & Romero, D. F. (2025).
OSF Preprint: https://osf.io/preprints/osf/72cen.
Abstract: We build a dataset of output and price effects of conventional monetary policy containing 146,463 point estimates and confidence bands from 4,871 impulse-response functions in 409 primary studies. Simple average responses suggest that interest rate hikes substantially dampen output and prices. However, we find robust evidence for publication bias. Bias corrections reduce effect sizes by half or more: in response to a 100 basis points rate hike, output and prices are unlikely to fall by more than 0.5 and 0.25 percent, respectively. Shock identification choices and publication characteristics correlate with effect sizes but are quantitatively less important than publication bias.
Description: The figure displays the responses of output, price level, and interest rate to a contractionary interest rate shock of 100 basis points, synthesized from the full body of the empirical literature. The blue lines depict the average response paths, while the blue shaded areas represent the corresponding upper and lower 68% and 95% confidence intervals. In addition, the green shaded area shows the range of bias-corrected estimates, based on the 16–84 and 2.5–97.5 percentile ranges derived from up to 42 meta-regression estimates. The green areas should be interpreted relative to the blue average response lines and are not directly comparable to the blue confidence intervals. The dark green dashed line indicates the average bias-corrected response path. Furthermore, the grey dash-dotted line shows the average bias-corrected response for a high-quality subsample excluding outdated Cholesky/SVAR-identified models. Source: https://osf.io/preprints/osf/72cen, Figure 1.
Interpretation: The simple average responses (blue lines) suggest a pronounced negative reaction of output and the price level following a contractionary monetary policy shock. However, we find robust evidence that these results are distorted by p-hacking and publication bias. After correcting for bias (dark green dashed line), the estimated effects are substantially smaller. Based on the bias-corrected estimates, it is unlikely that output and prices decline by more than 0.5 percent and 0.25 percent, respectively, in response to an interest rate increase of 100 basis points.
Further publications:
Empirical benchmarks for ESCB models: A quantitative assessment of the macroeconomic impact of the 2022-23 monetary policy tightening
Bobasu, A., Ciccarelli, M., Gechert, S. & Prante, F. (2025).
http://SUERF Policy Note No, 381
Interest rate hikes are less powerful in reducing inflation than conventional wisdom suggests
Enzinger, M., Gechert, S., Heimberger, P., Prante, F. & Romero, D. F. (2025)
http://SUERF Policy Brief No, 1287
Media Coverage
The overstated effects of conventional monetary policy on output and prices
Enzinger, M., Gechert, S., Heimberger, P., Prante, F. & Romero, D. F. (2025).
European Macro Policy Network
Project Documents and Repositories
- Pre-registration: https://osf.io/cduq4
- Daten/Replikationsmaterialien: https://github.com/META-CMP/data
Context
Heating and cooling in buildings, include natural gas, liquefied petroleum gas (LPG), coal, fuel oil, and electricity, account for about a quarter of global final energy consumption and about 20% of global energy-related carbon dioxide emissions. At the same time, global cooling energy demand is s expected to grow massively due to rising temperatures and the increasing availability of cooling appliances.
In this context, the price elasticity of demand for heating and cooling energy represents a central parameter for understanding the power of self-correcting market mechanisms after energy price shocks and the steering effects of CO2 prices.
To this end, we conduct a comprehensive meta-analysis of the empirical evidence on the price elasticity of energy demand in buildings. The meta-analysis systematizes the widely dispersed elasticity estimates, identifies potential sources of bias and heterogeneity (e.g., p-hacking, publication bias, data and modelling choices, and other study characteristics), and derives bias-corrected conclusions on the effectiveness of price changes based on a broad empirical evidence base.
In particular, we are interested in:
- how price-elastic the demand for various fossil fuels is and
- which factors systemically influence price elasticity.
The results indicate that the demand-side effects of price changes are smaller than previously assumed. Consequently, further analyses and policy recommendations should take into account potentially lower demand elasticities.
Research Papers:
The Price Elasticity of Heating and Cooling Energy Demand
Gechert, S., Mey, B., Prante, F., & Schäfer, T. (2025).
OSF Preprint: https://osf.io/preprints/osf/4sjy5.
Abstract: We create a large meta-dataset of price elasticities of energy demand for heating and cooling in buildings, comprising close to 5000 price elasticity estimates including study and observation characteristics from more than 400 primary studies. We find robust and strong signs of p-hacking and publication bias with insignificant or positive elasticities being underrepresented. Correcting for this bias, the price elasticities range from -0.05 to -0.2 for the short run and from -0.1 to -0.3 for the long run. This holds for all relevant fossil fuels and electricity, poor and rich countries, residential and business usage, and aggregate and survey data.
Description: The figure shows histograms of the z-statistics of the short-run (left panel) and long-run (right panel) price elasticities of demand for heating and cooling energy. The vertical red lines represent the conventional statistical significance threshold for negative elasticities at the 5% level (z <−1.96). Source: https://osf.io/preprints/osf/4sjy5, Figure 1.
Interpretation: The histograms display two notable discontinuities: first, there is a clustering of estimates just to the left of z = 0, indicating that results with negative elasticities are more likely to be reported. Second, there is an accumulation of values just left of the conventional 5% significance threshold for negative effects (z < −1.96), in line with p-hacking at this level. This two-step staircase pattern appears stronger for the short run but is also visible in the long-run histogram.
Description: The figures present the unweighted averages (UA, dotted lines) and publication bias–adjusted effect sizes (PEESE method, solid lines) for short-run and long-run elasticities across key subsamples: energy source (electricity and natural gas), country group (OECD and non-OECD), sector (residential and business), publication type (top journals vs other). Quelle: https://osf.io/preprints/osf/4sjy5, Figure 4.
Interpretation: Publication bias leads to exaggerated effect sizes across all subsamples. Moreover, the corrected elasticities are more homogeneous among the considered subgroups than the uncorrected values.
Media Coverage
Emissionshandel die Zweite: Füße stillhalten!
Henze, L., & Illenseer, N. (2025).
Dezernat Zukunft
Project Documents and Repositories
- Pre-registration: https://osf.io/zdche
- Daten/Replikationsmaterialien: https://github.com/META-Energy/data
In both subprojects we conduct a meta-analysis. More details on how to use this tool can be found here. In our project we proceed as follows:
- collection of literature
- online libraries (e.g. Google Scholar or EconLit)
- already published studies
- snowballing
- Title and abstract screening
- Full text screening
- Extract data from the studies
- Data analysis
- Publishing
Depiction of the abstract screening process with the open-source software ASR-Review
The process of collecting literature using the PRISMA flow chart
We want to use our results to
- develop recommendations for action for policy-makers,
- policy papers or blog posts,
- participate in conferences,
- and to make the topics accessible to an interested public
Interested students can prepare a bachelor's or master's thesis within the project at any time.
