This paper presents an extension of the Bank of Italy's quarterly macroeconometric model which makes it possible to take into account natural gas price fluctuations and facilitates a more accurate utilization of fiscal variables that influence the final price of energy goods. The enhanced model is employed to assess the effectiveness of the measures adopted to mitigate the impact of the energy price surge that occurred in 2021-22 on the economic conditions of households and firms.
The changes introduced to the model significantly enhance its capacity to capture the macroeconomic effects of fluctuations in energy commodity prices. It is estimated that the measures implemented to counter the surge in energy prices during the 2021-22 period held inflation back by around 2 percentage points and supported GDP growth by approximately 1 percentage point.
