Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We use a dynamic equilibrium model featuring different sources of energy to assess the macroeconomic effects in the euro area of a temporary reduction in excise taxes on fossil fuels and increase in lump-sum transfers to the poorest (“hand-to-mouth”) households, and raising the monetary policy rate in response to a temporary increase in the international price of fossil fuels. The central bank must raise the monetary policy rate to stabilize inflation even if excise taxes are lowered, in particular if price- and wage-setting decisions are not strongly anchored to the central bank inflation target. Lump-sum transfers to hand-to-mouth households can stabilize their consumption with limited inflationary effects.