Lutz Kilian, 02 April 2017

Technological advances caused a boom in the production of ‘tight’ oil in the US, starting in 2008, which has changed how the US is affected by movements in global fuel prices. This column identifies how the US tight oil boom contributed to the decline of global oil prices in 2014-16, and how it has changed the way oil price shocks are transmitted – not just in the US but in the global economy, explaining how European gasoline prices have been less responsive than the US price of gasoline to shocks.

Thorsten Beck, Steven Poelhekke, 26 February 2017

The financial sector plays a critical role in intermediating domestic savings into domestic investment, so it should serve as an important absorption tool for natural resource windfalls. Using a panel dataset of over 150 developed and developing countries, this column argues that unexpected exogenous windfalls from natural resource rents are not intermediated. The findings are consistent with the negative long-term relationship between the reliance of a country on natural resources and financial sector development.

Judson Boomhower, Lucas Davis, 01 February 2017

Electricity prices can vary dramatically within a single day. However, most analyses of energy efficiency programmes ignore this variation, focusing on total energy savings without regard to when those savings occur. This column uses hourly smart-meter data to demonstrates a surprisingly large variation in economic value across energy efficiency investments. Air conditioner investments, for example, deliver savings when the value of electricity is high, increasing their value by about 50%.

Rabah Arezki, Rick van der Ploeg, Frederik Toscani, 15 December 2016

Global natural wealth has shifted from North to South over the past decades, with discoveries of major oil and gas fields and mineral deposits first in Latin America and more recently in Sub-Saharan Africa. This column argues that a more outward market orientation on the part of developing countries has been the key driving force behind this shift – over and above other forces such as the increase in emerging markets’ demand and/or developed countries running out of natural resources.

Koichiro Ito, Mar Reguant, 06 November 2016

In deregulated electricity markets, producers and consumers participate in auctions in forward and spot markets (‘sequential markets’) which determine the allocation of electricity production. This column asks whether financial traders should be allowed to participate in electricity markets to arbitrage a price difference between forward and spot markets. Creating a sequential market is likely to improve market efficiency and consumer welfare, and arbitrage by financial traders is likely to benefit consumers by lowering electricity prices, but from a social planner's point of view, arbitrage does not necessarily improve market efficiency.

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