European Parliament Library

Oil and the World Economy :, Some Possible Futures, Michael Kumhof, Dirk Muir

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
Table Of Contents
Cover; Contents; I. Introduction; II. The Model; A. Oil Supply; B. Oil Demand; 1. Baseline Scenario; 2. Growing Elasticity Scenario; 3. Entropy Boundary and Falling Elasticity Scenarios; 4. Technology Externality Scenario; C. World Oil Market Equilibrium; D. Calibration; III. Discussion of the Alternative Specifications; A. Entropy Boundary and Falling Elasticity Scenarios; 1. Supply Limitations; 2. Technical Substitutability; B. Growing Elasticity Scenario; C. Technology Externality Scenario; IV. Simulation Results; A. Baseline Scenario; B. Growing Elasticity Scenario
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (32 p.)
Specific Material Designation
Form Of Item

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