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On the comparative advantage of U.S. manufacturing:evidence from the shale gas revolution

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  • Arezki, Rabah
  • Fetzer, Thiemo

Abstract

This paper provides the first empirical evidence of the newly found comparative advantage of the United States manufacturing sector following the so-called shale gas revolution. The revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world owing to the physics of natural gas. Results show that U.S. manufacturing exports have grown by about 6 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.

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  • Arezki, Rabah & Fetzer, Thiemo, 2016. "On the comparative advantage of U.S. manufacturing:evidence from the shale gas revolution," LSE Research Online Documents on Economics 66410, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66410
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    11. Kurz, Antonia & Rubínová, Stela, 2024. "Trade effects of carbon pricing policies," WTO Staff Working Papers ERSD-2024-08, World Trade Organization (WTO), Economic Research and Statistics Division.
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    13. Kirat, Yassine, 2021. "The US shale gas revolution: An opportunity for the US manufacturing sector?," International Economics, Elsevier, vol. 167(C), pages 59-77.
    14. Reinhard Ellwanger & Hinnerk Gnutzmann & Piotr Śpiewanowski, 2025. "Cost Pass‐Through in Commodity Markets With Capacity Constraints and International Linkages," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 40(2), pages 149-163, March.
    15. Bajo-Buenestado, Raúl, 2018. "Relationship-specificity, incomplete contracts, and the pattern of trade: A comment on the role of natural resources," Energy Economics, Elsevier, vol. 75(C), pages 410-422.
    16. Wang, Qiang & Li, Shuyu & Li, Rongrong & Ma, Minglu, 2018. "Forecasting U.S. shale gas monthly production using a hybrid ARIMA and metabolic nonlinear grey model," Energy, Elsevier, vol. 160(C), pages 378-387.
    17. Jaimes, Richard & Gerlagh, Reyer, 2020. "Resource-richness and economic growth in contemporary U.S," Energy Economics, Elsevier, vol. 89(C).
    18. Ron H. Chan & Edward Manderson & Fan Zhang, 2022. "Indirect Energy Costs and Comparative Advantage," Economics Discussion Paper Series 2206, Economics, The University of Manchester.
    19. Yassine Kirat, 2021. "The US shale gas revolution: An opportunity for the US manufacturing sector?," Post-Print hal-03676616, HAL.
    20. Eife, Thomas, 2020. "The General Equilibrium Effects of the Shale Revolution," Working Papers 0694, University of Heidelberg, Department of Economics.
    21. Wang, Shuhong & Li, Weiyao & Zhang, Ying & Song, Malin & Chen, Xueli & Cui, Lianbiao, 2024. "The impact of a natural resource protection policy on economic development: Based on a policy evaluation of China’s coal resource tax reform," Energy Policy, Elsevier, vol. 192(C).

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