Eurozone economy: Influenced by natural gas prices

The presented research is relevant because it highlights the problems of competitiveness of the eurozone economy during the period of rising prices for natural gas in the world energy market. The article aims to describe the mechanism of influence of world prices for natural gas on the eurozone economy. To reach the aim, the theoretical foundations of regulating the economic system of the eurozone were considered; the appropriate methodology for studying the problem was selected; economic and mathematical models of the eurozone economy influenced by world prices for natural gas were built. The following scientific methods were used in the research: analysis, synthesis, monographic, tabular, graphical, ADF test, KPSS test, correlation analysis, Koyk method, and forecasting. The following results were obtained: high world prices for natural gas strengthen the exchange rate of the Russian ruble against the euro and increase the consumer price index in the eurozone; high consumer inflation in the eurozone is the reason for the increase in the interest rate by the European Central Bank; the increase in the interest rate of the European Central Bank strengthens the exchange rate of the euro against the Russian ruble and reduces the monetary aggregate M3 of the eurozone; in the eurozone, the contraction of the money supply has a negative effect on the gross domestic product, export and import of goods and services. Thus, the high cost of natural gas on the world energy market reduces the economy of the eurozone through the tight monetary policy of the European Central Bank. Using economic and mathematical models, the mechanism of the impact of world prices of natural gas on the economy of the eurozone through the monetary policy of the European Central Bank has been reconstructed: world prices for natural gas have an inverse relationship with the EUR/RUB currency pair and are directly linked to the consumer price index in the eurozone; the consumer price index in the eurozone has a direct impact on the interest rate of the European Central Bank; the interest rate of the European Central Bank has a direct relationship with the EUR/RUB currency pair and an inverse relationship with the M3 monetary aggregate of the eurozone; in the eurozone, the money supply directly affects the gross domestic product, exports and imports of goods and services. The presented results can be useful for civil servants in the Russian Federation for understanding the competitiveness of the domestic economy. The author declares no conflicts of interests.

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