Antonio Fatas (@antoniofatas.bsky.social)

Causal evidence on cost-of-living shocks: How the energy crisis affected energy demand, labour supply, and financial strain In a cost-of-living shock, households must cope with lower purchasing power while also substituting away from goods whose prices have risen. The distributional consequences of a price shock thus depend on households’ capacity to adjust. This column examines how households in Finland responded to the 2022 European energy crisis. Responses differed sharply by income, with low-income households showing the least scope to cut electricity use and the greatest signs of financial strain. Understanding these responses is important for designing relief policies during periods of high energy prices. https://cepr.org/voxeu/columns/causal-evidence-cost-living-shocks-how-energy-crisis-affected-energy-demand-labour