Oil and the World Economy: Some Possible Futures

WPIEA2012256 Image
Price:  $18.00

Author/Editor: Michael Kumhof, Dirk Muir
Release Date: © October, 2012
ISBN : 978-1-47558-664-0
Stock #: WPIEA2012256
English
Stock Status: On back-order

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Description

This paper, using a six-region DSGE model of the world economy, assesses the GDP and current account implications of permanent oil supply shocks hitting the world economy at an unspecified future date. For modest-sized shocks and conventional production technologies the effects are modest. But for larger shocks, for elasticities of substitution that decline as oil usage is reduced to a minimum, and for production functions in which oil acts as a critical enabler of technologies, GDP growth could drop significantly. Also, oil prices could become so high that smooth adjustment, as assumed in the model, may become very difficult.




More publications in this series: Working Papers


More publications by: Michael Kumhof ; Dirk Muir