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Quantifying the impact of coal on global economic growth and energy productivity in the early 21st century

Listed author(s):
  • Tarek Atallah
  • Jorge Blazquez

Two intriguing circumstances have characterized the behavior of energy markets in the first years of 21st Century: a sharp increase in oil prices without a clear impact on real economic activity and a relative stagnation of energy productivity after 30 years of continuous improvement. This paper uses a standard macroeconomic production function to show that these two circumstances are consistent with sharp global increase in coal production and consumption. Our results suggest that the strong shift in coal production in the period 2000-2007 can explain why the sharp increase in oil prices did not impact negatively global activity and a relative stagnation in energy productivity. In addition, the paper also highlights the shift in the energy mix towards coal and natural gas and alerts that these fuels, and not only crude oil, can be sources of macroeconomic shocks in the future.

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Article provided by FrancoAngeli Editore in its journal ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT.

Volume (Year): 2015/2 (2015)
Issue (Month): 2 ()
Pages: 93-106

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Handle: RePEc:fan:efeefe:v:html10.3280/efe2015-002007
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  1. Olivier J. Blanchard & Jordi Gali, 2007. "The Macroeconomic Effects of Oil Shocks: Why are the 2000s So Different from the 1970s?," NBER Working Papers 13368, National Bureau of Economic Research, Inc.
  2. Durand-Lasserve, Olivier & Pierru, Axel & Smeers, Yves, 2010. "Uncertain long-run emissions targets, CO2 price and global energy transition: A general equilibrium approach," Energy Policy, Elsevier, vol. 38(9), pages 5108-5122, September.
  3. James D. Hamilton, 2009. "Causes and Consequences of the Oil Shock of 2007-08," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 215-283.
  4. Ben S. Bernanke & Mark Gertler & Mark Watson, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
  5. Baltasar Manzano & Carlos de Miguel & JosÈ Mô MartÌn Moreno, "undated". "Oil Shocks and the Business Cycle in Europe," Studies on the Spanish Economy 215, FEDEA.
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  7. David I. Stern, 2012. "Interfuel Substitution: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 307-331, April.
  8. Carlos de Miguel & Baltasar Manzano & Jose M. Martin-Moreno, 2003. "Oil Price Shocks and Aggregate Fluctuations," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 47-61.
  9. Leduc, Sylvain & Sill, Keith, 2004. "A quantitative analysis of oil-price shocks, systematic monetary policy, and economic downturns," Journal of Monetary Economics, Elsevier, vol. 51(4), pages 781-808, May.
  10. Olivier J. Blanchard & Jordi Galí, 2007. "The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?," NBER Chapters,in: International Dimensions of Monetary Policy, pages 373-421 National Bureau of Economic Research, Inc.
  11. Lutz Kilian, 2008. "The Economic Effects of Energy Price Shocks," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 871-909, December.
  12. Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
  13. Mikhail Golosov & John Hassler & Per Krusell & Aleh Tsyvinski, 2014. "Optimal Taxes on Fossil Fuel in General Equilibrium," Econometrica, Econometric Society, vol. 82(1), pages 41-88, January.
  14. Lutz Kilian, 2009. "Not All Oil Price Shocks Are Alike: Disentangling Demand and Supply Shocks in the Crude Oil Market," American Economic Review, American Economic Association, vol. 99(3), pages 1053-1069, June.
  15. DURAND-LASSERVE, Olivier & PIERRU, Axel & SMEERS, Yves, 2010. "Uncertain long-run emissions targets, CO2 price and global energy transition : a general equilibrium approach," CORE Discussion Papers 2010027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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