Oil and the World Economy : Some Possible Futures
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
This 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.
Series:
Working Paper No. 12/256
Subject:
Demand Economic models Exhaustible resources External shocks Fossil fuels Oil depletion Oil prices Oil production Price elasticity Supply
English
Publication Date:
October 25, 2012
ISBN/ISSN:
9781475586640/1018-5941
Stock No:
WPIEA2012256
Format:
Paper
Pages:
31
Please address any questions about this title to publications@imf.org