Real Exchange Rate Adjustment and the Welfare Effects of Oil Price Decontrol
Conventional analysis of the welfare effects of U.S. oil price regulation in the 1970's focuses on the deadweight losses in the oil market. This paper argues that such analysis substantially understates the benefits from decontrolling prices, because decontrol will lead to an improvement in the U.S. terms of trade with respect to other oil importing countries. A simple model of the relationship between oil decontrol and the terms of trade is developed, and the impact is calculated for plausible parameter values. The results suggest that the terms of trade benefits are several times larger than the benefits as conventionally measured.
|Date of creation:||Apr 1981|
|Publication status:||published as (Published as "Differences In Income Elasticities and Trends in Real Exchange Rates") European Economic Review, Vol. 33, no. 5 (1989):1031-1046.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Samuelson, Paul A., 1971. "An exact Hume-Ricardo-Marshall model of international trade," Journal of International Economics, Elsevier, vol. 1(1), pages 1-18, February.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0658. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.