Macroeconomic and Uncertainty Shocks’ Effects on Energy Prices: A Comprehensive Literature Review

Abstract

GDP, monetary variables, corruption, and uncertainty are crucial to energy policy decisions in today’s interrelated world. The global energy crisis, aggravated by rising energy prices, has sparked a thorough analysis of its causes. We demonstrate the significance of categorizing research by influence channels while focusing on their implications for energy policy decisions. We investigate the growing number of studies that use GDP, inflation, central banks’ characteristics, corruption, and uncertainty as critical factors in determining energy policies. Energy prices fluctuate because energy policies shift the supply–demand equilibrium. We categorise the effects and show that GDP, economic policy uncertainty, and, most notably, specific economic conditions and extreme events play a significant role in determining energy prices. We observed that energy consumption, GDP growth, and energy prices have a bidirectional, causal relationship. Still, the literature has not established which causative direction is the most significant. Taxes, interest rates, and corruption also significantly determine energy prices, although the origins of corruption have not been adequately examined. Lastly, uncertainty generally increases energy costs, but this relationship requires additional research in terms of the features of countries, conditions, and, most importantly, the theoretical backgrounds used.