Energy

Gideon Bornstein, Per Krusell, Sérgio Rebelo, 01 March 2021

Oil markets have long been central to discussions of the global economy, and fluctuations in oil prices frequently gain widespread attention. This column explores the impact of the rising use of fracking on how oil markets are best conceived within modern macroeconomic theory. The author's model predicts that as fracking accounts for an increasingly sizeable fraction of the world oil supply, it may herald a new era of lower, more stable oil prices.

Hans Koster, Martijn Dröes, 20 September 2020

Countries that invest in renewable energy production face frequent opposition from local homeowners. Using a detailed housing transactions dataset covering the whole of the Netherlands since 1985, this column compares the overall impact that wind turbines and solar farms have on housing prices. It finds that tall wind turbines (over 150 metres) have a negative effect, and solar farms generate losses as well (2-3% for homeowners within a 1km orbit). This evidence should be factored into finding the optimal allocation of renewable energy production facilities. 

David Popp, Francesco Vona, Joëlle Noailly, 04 July 2020

Many governments worldwide are currently considering fiscal recovery packages to address the Covid-19 crisis. This column analyses the impact of past green fiscal stimulus on employment. Focusing on the American Recovery and Reinvestment Act after the Global Crisis, it finds that that the green stimulus was particularly effective in creating jobs in the long run, but not in the short run. Hence, while green stimulus packages are useful to reorient the economy and direct it onto a green trajectory in the longer run, they are less effective in restarting the economy quickly.

Jennifer Castle, David Hendry, 04 June 2020

The UK’s 2008 Climate Change Act has led to a 34% fall in CO2 emissions by 2019, while real GDP per capita had risen by more than 10% following the crash into the ‘Great Recession’. Can the UK achieve its recent net-zero emissions target by 2050 while still growing? This column describes some speculative routes to such a decarbonised future.

Torfinn Harding, Radek Stefanski, Gerhard Toews, 29 April 2020

Due to the collapse in the price of oil, oil-exporting economies are experiencing a huge loss of foreign revenues. This column argues that this may create a window of opportunity to transition away from resource dependence by expanding the tradable goods sector, hence diversifying the economies. Assuming symmetric economic responses for booms and busts and relying on estimates for unexpected giant resource discoveries which predict an appreciation of the real exchange rate and a contraction of the manufacturing sector, the current drop in the oil price may lead to a boom in manufacturing.

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