François Villeroy de Galhau: The magnitude and distribution of the energy and trade shocks in the euro area and in France
Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Toulouse School of Economics, Toulouse, 8 December 2022.
The views expressed in this speech are those of the speaker and not the view of the BIS.
I am delighted to be with you today and I would like to warmly thank TSE, Jean Tirole and other professors for giving me the opportunity to make this speech. My topic will be a very important issue at the current juncture, namely the external shock related to energy prices and the deterioration of the terms of trade, which are currently hitting European economies.
Today, in commodity-importing countries, the prices of imported products, especially energy products, are rising much more than the prices of exports. This is a net cost for commodity-importing countries, including France. In economic terms, the terms of trade, i.e. the ratio of export prices to import prices, are falling for those countries, thus reducing their purchasing power.
In this speech I will start by describing the various ways we can assess the energy and trade shocks we are facing, and remind us of some measurement challenges they raise. The comparisons across countries and across time will also be instructive. The second key issue I will discuss is how this shock has so far affected the economic agents in France, and how the burden of this shock should be shared across categories of agents.