Economic Consequences of Large Extraction Declines: Lessons for the Green Transition
IMF Working Papers, May 8, 2023
Source details
- Canonical URL
- Economic Consequences of Large Extraction Declines: Lessons for the Green Transition
Other formats
Bibliographic details
- Authors: Rudolfs Bems, Lukas Boehnert, Andrea Pescatori, Martin Stuermer
- Published: May 8, 2023
- Series: IMF Working Papers
Overview
- Title: Economic Consequences of Large Extraction Declines: Lessons for the Green Transition
- Authors: Rudolfs Bems, Lukas Boehnert, Andrea Pescatori, Martin Stuermer
- Date: May 8, 2023
- Series: Working Paper No. 2023/097
- Issue: 097
- Volume: 2023
- Pages: 48
- ISBN: 9798400241123
- ISSN: 1018-5941
- Stock No: WPIEA2023097
Research question and scope
- Limiting climate change requires a 80 percent reduction in fossil fuel extraction until 2050.
- Key question: What are the macroeconomic consequences for fossil fuel producing countries from large declines in extraction?
- Data scope:
- New data-set for 13 minerals (oil, gas, coal, metals)
- 122 countries
- Since 1950
- Identified episodes: 35 episodes of persistent, exogenous declines in extraction.
Methodology
- Empirical approach: local projections to estimate effects on:
- Real output (real GDP)
- External sector (trade balance, net exports, real exchange rate)
- Domestic sector
Main findings
- Declines in extractive activity lead to persistent negative effects on real GDP.
- Declines in extractive activity lead to persistent negative effects on the trade balance.
- The real exchange rate depreciates but not enough to offset the decline in net exports.
- Effects on low-income countries are significantly larger than on high-income countries.
- Results suggest that legacy effects of bad institutions could prevent countries from benefiting from lower resource extraction.
Subjects and keywords
- Subject: Commodities, Consumption, Economic sectors, Environment, Manufacturing, Mining sector, National accounts, Non-renewable resources
- Keywords: aggregate output, climate policies, commodity price data, Consumption, development, energy transition, fossil fuels, Global, interaction term, legacy effect, limiting climate change, low income, macroeconomics, Manufacturing, Mining sector, Non-renewable resources, open economy, real GDP response, Resource-rich countries
IMF Working Paper No. 2023/097 (Rudolfs Bems, Lukas Boehnert, Andrea Pescatori, Martin Stuermer), May 8, 2023.
Content in this bundle
- Working Paper