Oil Discovery, Boom-Bust Cycle and Manufacturing Slowdown: Evidence from a Large Industry Level Dataset
Nouf Alsharif () and
Sambit Bhattacharyya ()
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Nouf Alsharif: Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom
Sambit Bhattacharyya: Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom
Working Paper Series from Department of Economics, University of Sussex Business School
We investigate the effects of giant oil discovery and boom-bust price cycle on manufacturing using a large dataset of up to 49481 two-digit industry-years across 136 countries over the period 1962 to 2012. We find that oil discovery reduces growth in manufacturing value added and wages. The effect on employment is insignificant. We also find strong association between oil discovery and manufacturing slowdown episodes. Oil price boom and bust both negatively affects manufacturing perhaps due to increasing input cost (boom) and declining demand (bust). We do not find any evidence in favor of a real exchange rate appreciation driven effect as outlined in standard Dutch Disease models. We speculate that the effect is primarily driven by an increase in the cost of locally sourced manufacturing input.
Keywords: Oil discovery; Boom-Bust; Manufacturing growth (search for similar items in EconPapers)
JEL-codes: D72 O11 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:0222
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