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On the Comparative Advantage of US Manufacturing: Evidence from the Shale Gas Revolution

Author

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  • Rabah Arezki
  • Thiemo Fetzer

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.

Suggested Citation

  • Rabah Arezki & Thiemo Fetzer, 2016. "On the Comparative Advantage of US Manufacturing: Evidence from the Shale Gas Revolution," OxCarre Working Papers 167, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:167
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    File URL: https://www.economics.ox.ac.uk/materials/OxCarre/ResearchPapers/oxcarrerp2016167.pdf
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    Cited by:

    1. repec:eee:energy:v:160:y:2018:i:c:p:378-387 is not listed on IDEAS
    2. Richard Jaimes & Reyer Gerlagh, 2017. "Resource-Richness and Economic Growth in Contemporary U.S," CESifo Working Paper Series 6778, CESifo Group Munich.
    3. Hanwei Huang & Jiandong Ju & Vivian Z. Yue, 2017. "Structural Adjustments and International Trade: Theory and Evidence from China," CEP Discussion Papers dp1508, Centre for Economic Performance, LSE.
    4. James Cust & Torfinn Harding & Pierre-Louis Vezina, 2017. "Dutch Disease Resistance: Evidence from Indonesian Firms," OxCarre Working Papers 192, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    5. Edward J Manderson & Richard Kneller, 2019. "Energy endowments and the location of manufacturing firms," The School of Economics Discussion Paper Series 1907, Economics, The University of Manchester.
    6. repec:eee:eneeco:v:75:y:2018:i:c:p:410-422 is not listed on IDEAS

    More about this item

    Keywords

    manufacturing; exports; energy prices; shale gas;

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • N52 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: 1913-
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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