IMF Working Papers Volume 2017 Issue 015: Oil Prices and the Global Economy (2017)

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Oil Prices and the Global Economy

Author:

Mr. Rabah Arezki

Mr. Rabah Arezki
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Zoltan Jakab

Zoltan Jakab
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Mr. Douglas Laxton

Mr. Douglas Laxton
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Mr. Akito Matsumoto

Mr. Akito Matsumoto
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Armen Nurbekyan

Armen Nurbekyannull

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Hou Wang

Hou Wang
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Jiaxiong Yao

Jiaxiong Yao
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Series:: IMF Working Papers

Volume/Issue:: Volume 2017: Issue 015

Publication Date:: 27 Jan 2017

DOI:: https://doi.org/10.5089/9781475572360.001

ISBN:: 9781475572360

ISSN:: 1018-5941

Pages:: 30

Keywords:: WP; oil price; demand and supply; price incentive; supply shock; Oil market; macroeconomic model; depletion; consumption efficiency; technology; cycle; demand and supply price elasticity; oil supply; supply curve; price of oil; Oil prices; Oil; Oil production; Natural gas sector; Supply elasticity; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2017: Issue 015

Language:: English

Publication Date:: 27 Jan 2017

DOI:: https://doi.org/10.5089/9781475572360.001

ISBN:: 9781475572360

ISSN:: 1018-5941

Pages:: 30

Keywords:: WP; oil price; demand and supply; price incentive; supply shock; Oil market; macroeconomic model; depletion; consumption efficiency; technology; cycle; demand and supply price elasticity; oil supply; supply curve; price of oil; Oil prices; Oil; Oil production; Natural gas sector; Supply elasticity; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper presents a simple macroeconomic model of the oil market. The model incorporates features of oil supply such as depletion, endogenous oil exploration and extraction, as well as features of oil demand such as the secular increase in demand from emerging-market economies, usage efficiency, and endogenous demand responses. The model provides, inter alia, a useful analytical framework to explore the effects of: a change in world GDP growth; a change in the efficiency of oil usage; and a change in the supply of oil. Notwithstanding that shale oil production today is more responsive to prices than conventional oil, our analysis suggests that an era of prolonged low oil prices is likely to be followed by a period where oil prices overshoot their long-term upward trend.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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