Description:
We study the impact of the widening energy price differentials caused by the war in Ukraine on the returns of European and US firms. Using several measures of firms’ exposure to energy consumption, we show that return differentials between EU and US firms widened significantly and persistently after the outbreak of the war in Ukraine. These findings suggest that the impact of the war on energy prices may have lasting economic implications for Europe, potentially exacerbating its competitiveness disadvantages compared with other geographic regions that have access to more affordable energy inputs