Annex: Preliminary Simulations
This annex details the preliminary simulations prepared to establish consistency between GEM and GIMF simulations.
Anderson, D., B. Hunt, M. Kortelainen, M. Kumhof, D. Laxton, D. Muir, S. Mursula, and S. Snudden. 2013, “Global Integrated Monetary and Fiscal Model (GIMF) – Model Properties,” IMF Working Paper No. 13/55.
Arezki, R., V. A. Ramey. and L. Sheng, 2015, “News Shocks in Open Economies: Evidence from Giant Oil Discoveries,” forthcoming IMF Working Paper.
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Blanchard, O, and Arezki, R., 2014, “Seven Questions about the Recent Oil Price Slump,” IMF Direct Blog. Available at http://blog-imfdirect.imf.org/2014/12/22/seven-questions-about-the-recent-oil-price-slump/.
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Shale is fine-grained sedimentary rock that can be rich in oil and natural gas, but because of its low permeability the contained oil and gas does not flow easily to wells without the use of advance drilling and extraction techniques.
For example, this analysis cannot explain the sharp decline in oil prices that occurred in late 2014 which resulted from a range of demand and supply factors that are discussed in Blanchard and Arezki (2014).
Total liquids include crude oil, natural gas liquids, nontraditional oil such as extra heavy oil, gas-to-liquids and coal-to-liquids, and biofuels such as ethanol.
The interested reader can find a detailed exposition of the theoretical structure of GEM as well as several practical applications in IMF (2008). For detailed documentation on the structure of the model see Kumhof and others (2010). For details on the model’s properties see Anderson and others (2013).
In the models, the euro area consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Italy, Ireland, Luxemburg, Netherlands, Portugal, Slovenia, Slovakia, and Spain. Emerging Asia consists of China, Hong Kong Special Administrative Region of China, Indonesia, India, the Republic of Korea, Malaysia, Singapore, the Philippines, Thailand, and Taiwan Province of China. Latin America includes Brazil, Chile, Colombia, Mexico, and Peru. The remaining countries block includes other countries not elsewhere included.
Some major oil and gas exporting countries, for example those in the Middle East and North Africa region, have fixed exchange rate regimes. This aspect is not modeled here.
In GEM the case where the increase in U.S. unconventional energy is driven by higher productivity rather than more reserves was also considered. However, the real GDP impact was virtually identical to the reserves case.