Oil Price Movements and the Global Economy: A Model-Based AssessmentSelim Elekdag, René Lalonde, Douglas Laxton, Dirk Muir () and Paolo A. Pesenti IMF Staff Papers, 2008, vol. 55, issue 2, pages 297-311 Abstract: This paper develops a five-region version—Canada, a group of oil-exporting countries, the United States, emerging Asia, and Japan plus the euro area—of the global economy model encompassing production and trade of crude oil. In the presence of real adjustment costs that reduce the short- and medium-term responses of oil supply and demand, our simulations can account for large endogenous variations of oil prices with large effects on the terms of trade of oil-exporting versus oil-importing countries, and result in significant wealth transfers between regions. This is especially true when we consider a sustained increase in productivity growth or a shift in production technology toward more oil-intensive goods in regions such as emerging Asia. In addition, we study the implications of higher taxes on gasoline, showing that such a policy could increase world productive capacity while being consistent with a reduction in oil consumption. IMF Staff Papers (2008) 55, 297–311. doi:10.1057/imfsp.2008.3; published online 25 March 2008 Downloads: (external link) Related works: Ordering information: This journal article can be ordered from Access Statistics for this article More articles in IMF Staff Papers from Palgrave Macmillan Journals |
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