|
on Energy Economics |
| By: | Lutz Kilian; Alessandro Rebucci; Nikola Spatafora |
| Abstract: | This paper studies the effects of demand and supply shocks in the global crude oil market on several measures of countries' external balance, including the oil and non-oil trade balances, the current account, and changes in net foreign assets (NFA) during 1975-2004. We explicitly take a global perspective. In addition to the U.S., the Euro area and Japan, we consider a number of country groups including oil exporters and middle-income oil-importing economies. We find that the effect of oil shocks on the merchandise trade balance and the current account, which depending on the source of the shock can be large, depends critically on the response of the nonoil trade balance, and differs systematically between the U.S. and other oil importing countries. Using the Lane-Milesi-Ferretti NFA data set, we document the presence of large and systematic (if not always statistically significant) valuation effects in response to oil shocks, not only for the U.S., but also for other oil-importing economies and for oil exporters. Our estimates suggest that increased international financial integration will tend to cushion the effect of oil shocks on NFA positions for major oil exporters and the U.S., but may amplify it for other oil importers. |
| Date: | 2007–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/110&r=ene |
| By: | Jumah, Adusei (Department of Economics, University of Vienna, BWZ, Vienna, Austria); Pastuszyn, Georg (Department of Economics, University of Vienna, BWZ, Vienna, Austria) |
| Abstract: | The current study examines the relationship between the world oil price and aggregate demand in a developing country, Ghana, via the interest rate channel by means of cointegration analysis. Results of the study indicate that oil price—by impacting the price level positively—negatively impacts real output. The results also indicate that monetary policy is initially eased in response to a surge in the price of oil in order to lessen any growth consequences, but at the cost of higher inflation. The ensuing higher inflation, however, prompts a subsequent tightening of monetary policy leading to a further decline in output. In addition, output does not revert quickly to its initial level after an oil price shock, but declines over an extended period. |
| Keywords: | Aggregate demand, inflation, monetary policy, oil |
| JEL: | C32 E50 O13 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihsesp:212&r=ene |
| By: | Mohsen Bahmani-Oskooee; Magda E. Kandil |
| Abstract: | Conventional wisdom states that currency depreciation in oil-producing countries are contractionary because demand effects, limited by the prevalence of oil exports priced in dollars, are more than offset by adverse supply effects. Iran, however, has experienced a rapid increase in non-oil exports in the last decade. Against this background, the paper tests whether the conventional wisdom still applies to Iran and concludes that the emergence of the non-oil export sector has made currency depreciation expansionary. The expansionary effect is particularly evident with respect to anticipated persistent depreciation in the long-run. Notwithstanding the varying effects of exchange rate fluctuations on the demand and supply sides of the economy, managing a flexible exchange rate gradually over time towards achieving stability in the real effective exchange rate may strike the necessary balance. |
| Date: | 2007–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/113&r=ene |
| By: | Noureddine Krichene |
| Abstract: | This paper formulated a short-run model, with an explicit role for monetary policy, for analyzing world oil and gas markets. The model described carefully the parameters of these markets and their vulnerability to business cycles. Estimates showed that short-run demand for oil and gas was price- inelastic, relatively income-elastic, and was influenced by interest and exchange rates; short-run supply was price-inelastic. Short-run price inelasticity could be a source for high volatility in oil and gas prices, and could confer to producers a temporary market power. Being simultaneous and incorporating interest and exchange rates, the model could be useful in short-term forecasting of oil and gas outputs and prices under policy scenarios. |
| Date: | 2007–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/135&r=ene |
| By: | Francisco J. André (Department of Economics, Universidad Pablo de Olavide); M. Alejandro Cardenete (Department of Economics, Universidad Pablo de Olavide); Carlos Romero (Departamento de Economía y Gestión Forestal, Escuela Tecnica Superior de Ingenieros de Montes, Universidad Politécnica de Madrid.) |
| Abstract: | Economic policy needs to pay more attention to environmental issues. This calls for the development of methodologies capable of incorporating environmental as well as macroeconomic goals in the design of public policies. In view of this, this paper proposes a methodology based upon Simonian satisficing logic implemented with the help of goal programming models to address the joint design of macroeconomic and environmental policies. The methodology is applied to the Spanish economy, where a joint policy is elicited, taking into account macroeconomic goals (economic growth, inflation, unemployment, public deficit) and environmental goals (CO2, NOx and SOx emissions) within the context of a computable general equilibrium model. |
| Keywords: | Environmental policies, goal programming, macroeconomic policies, computable general equilibrium model, multiple criteria decision making, satisficing logic. |
| JEL: | C61 C68 Q58 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:07.12&r=ene |
| By: | McManus, Walter |
| Abstract: | A growing majority of climate scientists are convinced that unless emissions are reduced, global warming would cause a number of adverse effects throughout the United States. In California, rising temperatures would reduce the snow pack in the Sierra-the state's primary source of water-and lead to less water for irrigating farms in the Central Valley. Global warming would increase the number of extreme heat days and greatly increase the risk of poor air quality across the state. California's 1,100 miles of coastline and coastal communities are vulnerable to rising sea levels. Concerted action could curb global warming, but all sectors would need to take immediate steps to reduce heattrapping pollution. In California, the transportation sector consumes well over half the oil used statewide, and passenger cars and trucks emit 20 to 30 percent of the state's global warming pollution. Vehicles therefore are a central focus of the immediate action required to reduce global warming. The state of California's regulatory approach involves phasing in limits to average global warming emissions from passenger cars and trucks beginning in 2009 and culminating in 2016. This regulation is often called "Pavley," after its author, Assemblywoman Fran Pavley. The federal government's approach provides tax incentives to buyers of hybrid vehicles, which emit significantly lower amounts of global warming pollution than most conventional vehicles. However, the hybrid incentive affects only a small portion of the vehicle market. A third approach that could be used to enhance or replace existing regulations would be a feebates program. A feebates program creates a schedule of both fees and rebates that reflects the amount of global warming pollution that different vehicles emit. Purchasers of new vehicles that emit larger amounts of heat-trapping emissions pay a one-time surcharge at the point of purchase. These surcharges are then used to provide rebates to buyers of new vehicles that emit less pollution. A feebates program has several advantages over other approaches: Market-oriented: A feebates program recognizes the power of price signals to change consumer behavior. That is, incentives spur consumers to purchase and manufactures to produce cleaner vehicles. Self-financing: A feebates program can be designed so that the surcharges collected equal the rebates paid. Affects entire market: A feebates program applies to all new vehicles-clean and dirty-spurring a transformation of the entire market. Consumer choice: A feebates program can be designed so that consumers have the option to buy vehicles that carry no surcharge in each vehicle class, such as cars, trucks, sport utility vehicles (SUVs), and minivans. This study explores the economic impacts on consumers and manufacturers of the existing Pavley regulation and a feebates program by analyzing four alternative scenarios, using information from 2002 as the base year. Our findings show that a feebates program is an effective strategy to reduce global warming pollution by up to 25% more than Pavley alone. Also, under a feebates program consumers will save thousands of dollars and retailers will see their revenue rise by as much as 6%. |
| Keywords: | automotive industry; feebates; greenhouse gases; vehicle emissions; public policy |
| JEL: | Q52 Q58 L62 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3461&r=ene |