To: Mark Adams who wrote (263 ) 9/12/2000 1:43:31 AM From: Mark Adams Read Replies (1) | Respond to The tidbits I found most interesting... ... higher energy prices disproportionately increase the cost of production for energy-intensive industries. As energy price increases are passed along by industry through higher prices for their products, consumers will tend to substitute away from the relatively expensive energy-intensive products to less energy-intensive products and services. The consequences are reductions in gross output from the energy-intensive sectors of the economy, principally, chemicals and allied products; stone, clay, glass, and concrete; and primary metals. [ Should Fiscal Policy be used to ease the higher energy costs ] through personal income tax rebates, moderating the projected impacts on disposable income. Consequently, in percentage terms, consumer spending falls by less than GDP, while investment falls by more. This change in the composition of final demand decreases the output from consumer-related sectors, such as services and retail trade, by less than the average drop for all economic output, while decreasing the output from the construction and manufacturing sectors by more than the average.
