Oil: Carbon for growth

Abstract

The six-month drop in Brent crude oil prices has opened up new prospects for oil-importing countries. Indeed, by 2016, supply will outpace demand, fueled by shale oil production in the United States and without triggering any OPEC reaction. The OFCE has developed two macroeconomic operational models for the French economy (e-mod.fr and ThreeMe), which enable us to evaluate the impact of a price shock on the overall economy and environment, as well as activity transfers between economic sectors. Apart from the United States, the impact of falling oil prices appears positive, significant, and comparable between countries. The American economy also experiences positive effects, but falling oil prices strongly impact non-conventional oil extraction activities. This, in turn, slows growth and mitigates the positive impact of the initial shock. Our results are similar to those of other international organizations.

Publication
Revue de l’OFCE, 138
Date