The impact of energy prices on factor reallocation

The project aims to study the impact of energy prices on factor reallocation across firms and sectors. How energy prices affect firms at the micro level and how the impact aggregates to the macro level is crucial for understanding and predicting the effect of energy policies. The question is highly policy-relevant given that there will be more stringent climate legislation that is likely to lead to increases in energy prices in the future. Our investigation will be focused on the evolution of productivity and innovation activities as main mechanisms behind factor reallocation.