Amid a persistent fall in oil prices, many oil-exporting countries are realising that economic diversification should be a top priority. One important pathway is to create a dynamic export sector. This column argues the standard policy of structural reforms – which mostly tackle ‘government failures’ rather than ‘market failures’ – are not sufficient. The state needs to intervene to change the incentive structure of firms and workers, and impose a strict accountability framework.
Reda Cherif, Fuad Hasanov, Min Zhu, 03 September 2016
Achyuta Adhvaryu, Namrata Kala, Anant Nyshadham, 27 August 2016
Energy-efficient technologies are an increasingly relevant policy priority, given growing consensus on the need to tackle climate change. This column examines the productivity benefits of adopting one such technology – LED lighting – for manufacturing firms in India. It finds that improved productivity resulting from LED lighting’s lower heat emissions makes adopting such technology far less costly than previous anticipated, particularly for labour-intensive firms in hot climates.
Rabah Arezki, Adnan Mazarei, Ananthakrishnan Prasad, 29 November 2015
As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. This column goes through the evidence, suggesting that the low price environment is likely to test the relationship between governments in oil-exporting countries and their sovereign wealth funds, at a time when spending is going up.
Ejaz Ghani, Arti Grover Goswami, William Kerr, 18 November 2015
Urbanisation in India is taking many twists and turns. Organised manufacturing is moving out of urban areas, while unorganised manufacturing is transitioning towards urban areas. As the fourth greatest energy consumer in the world, how the country manages this ongoing industrialisation and urbanisation process will have important environmental implications. This column looks at the relationship between growth, geography, and energy efficiency in manufacturing in India. Electricity consumption per unit of output has declined in urban and rural areas, but these overall trends mask substantial variation between states and substantial potential for further efficiency improvements in energy-intensive industries.
James Feyrer, Erin Mansur, Bruce Sacerdote, 16 November 2015
Fracking has driven an oil and natural gas boom in the US over the past decade. This column examines the impact these mining activities have had on local and regional economies. US counties enjoy significant economic benefits, including increased wages and new job creation. These effects grow as the geographic radius is extended to include neighbouring areas in the region. The results suggest that the fracking boom provided some insulation for these areas during the Great Recession, and lowered national unemployment by as much as 0.5%.
Meredith Crowley, Huasheng Song, 22 October 2015
Europe has a trade policy for solar panels that is designed to level the playing field between Europe and countries like China. This column assesses the EU’s stance. Antidumping policy is supposed to promote a fair competitive environment between domestic import-competing and foreign exporting firms. However, evidence suggests that publicly listed Chinese private sector firms experienced large losses under Europe's import restrictions, while state-owned enterprises experienced little or no adverse impact. Rather than fostering fair competition in green energy products, Europeans have unintentionally tilted the playing field against the Chinese private sector in favour of the state.
Áureo De Paula, John Lynham, Timothy Halliday, 22 June 2015
For policy to target air pollution optimally, a thorough understanding of its harms is required. However, disentangling the health effects of specific pollutants has proved challenging, as multiple chemicals tend to co-occur in industrial pollution. This column exploits volcanic emissions in Hawaii to examine the health impact of a specific pollutant – airborne particulates. Short-term exposure to particulate pollution is found to increase pulmonary-related hospitalisations and expenditures, particularly among very young children.
Lutz Kilian, 14 January 2015
The recent expansion of US shale oil production has captured the imagination of policymakers and industry analysts. It has fuelled visions of the US becoming independent of oil imports, of cheap US gasoline, of a rebirth of US manufacturing, and of net oil exports improving the US current account. This column asks how plausible these visions are, and examines the evidence to date.
Avner Offer, 19 September 2014
Victory in World War I relied on three types of energy: renewable energy for food and fodder, fossil energy, and high explosive. This column argues that the Allies had a clear advantage in manpower, coal, and agriculture, but not enough for a quick decision. Mobilisation in continental economies curtailed food production, occasionally to a critical level. Technical competition was a matter of capacity for innovation, not of particular breakthroughs. Coercive military service and rationing of scarce energy and food had egalitarian consequences that continued after the war.
Jeffrey Frankel Frankel, 09 September 2014
Subsidies for food and energy are economically inefficient, but can often be politically popular. This column discusses the efforts by new leaders in Egypt, Indonesia, and India to cut unaffordable subsidies. Cutting subsidies now may even be the politically savvy choice if the alternative is shortages and an even more painful rise in the retail price in future. Ironically, it is India’s new Prime Minister Modi – elected with a large electoral mandate and much hype about market reforms – who is already shrinking from the challenge.
Radek Stefanski, 30 May 2014
No comprehensive database of directly measured fossil-fuel subsidies exists at the international or the sub-national level, yet subsidies may be crucial drivers of global carbon emissions. This column describes a novel method for inferring carbon subsidies by examining country-specific patterns in carbon emission-to-output ratios, known as emission intensities. Calculations for 170 nations from 1980-2010 reveal that fossil-fuel price distortions are enormous, increasing, and often hidden. These subsidies contributed importantly to increasing emissions and lower growth.
Mathilde Mathieu, Thomas Spencer, Oliver Sartor, 22 March 2014
The US unconventional energy boom has reversed the decline of domestic production, lowered oil and gas imports, reduced gas prices, and created political space for tougher regulations on coal-fired power plants. This column argues that it is not a panacea, however. Even if current estimates prove accurate, the long-run benefits to the US economy will be relatively small. Improving energy efficiency and promoting low-carbon technologies will be just as important as before – especially for the EU, given its more limited known reserves of unconventional oil and gas.
Enrica De Cian, Samuel Carrara, Massimo Tavoni, 22 December 2013
After the Fukushima incident in 2011, many countries decided to shrink their nuclear power programmes. This article presents recent research on the optimal role of nuclear power in reducing carbon emissions. Phasing out nuclear power would be costly, since it is currently the cheapest low-carbon alternative to fossil fuels. However, these costs would be largely offset by the implicit subsidy to R&D in renewables, which suffers from innovation externalities. Still, carbon pricing and explicit R&D subsidies would be a more efficient way of determining the future of nuclear power.
Richard Tol, Seán Lyons, 12 November 2011
Politicians around the world like to argue that ‘green growth’ will create jobs and stimulate innovation. This column examines the impact of energy taxes on business, with a dataset of 11 million European firms between 1996 and 2007. The results are mixed – it seems that dirty, smoke-filled growth may well be better for the firm’s workers and their customers.
Matthew Kotchen, Laura Grant, 05 December 2008
Daylight saving time, designed for energy conservation purposes, is among the most widespread regulations on the planet. Surprisingly little evidence exists that it actually saves energy. This column, using a natural experiment, concludes that “saving” daylight has cost electricity.