Oil and the World Economy: Some Possible Futures
AbstractThis 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.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 12/256.
Date of creation: 25 Oct 2012
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
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