Rabah Arezki, Per Magnus Nysveen, 01 April 2022

The sanctions placed on Russian oil may give new impetus to the energy transition by encouraging developed economies to find new sources of energy. Current policy has focused largely on supply-side responses to manage this development; this column argues that demand-side policies may also play a critical role. The authors argue for policies that increase the price elasticity of oil demand, such as incentives for individuals to switch to electric vehicles through subsidies. Nonetheless, they emphasise that the distributional effects of policies, including carbon pricing, are politically important and cannot be ignored. 

Reda Cherif, Fuad Hasanov, 10 November 2012

Policymakers in many commodity-exporting countries confront the question of how much to consume, save, and invest out of revenues from commodity exports. This column says policy should focus on improving productivity in the tradeable sector and reducing volatility through diversifying this sector. This would lower precautionary saving needs, increase investment, raise consumption, and improve welfare.

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