The Unassuming Economist

From a new IMF working paper by Bertrand Gruss and Suhaib Kebhaj:

“This paper presents a comprehensive database of country-specific commodity price indices for 182 economies covering the period 1962-2018. For each country, the change in the international price of up to 45 individual commodities is weighted using commodity-level trade data. The database includes a commodity terms-of-trade index which proxies the windfall gains and losses of income associated with changes in world price as well as additional country-specific series, including commodity export and import price indices. We provide indices that are constructed using, alternatively, fixed weights (based on average trade flows over several decades) and time-varying weights (which can account for time variation in the mix of commodities traded and the overall importance of commodities in economic activity). The paper also discusses the dynamics of commodity terms of trade across country groups and their influence on key macroeconomic aggregates.”

A new working paper by Nida Cakir Melek, Michael Plante, Mine K. Yucel:

“We examine the implications of the U.S. shale oil boom for the U.S. economy, trade balances, and the global oil market. Using comprehensive data on different types of crude oil, and a two-country general equilibrium model with heterogenous oil and refined products, we show that the shale boom boosted U.S. real GDP by 1 percent and improved the oil trade balance as a share of GDP by more than 1 percentage points from 2010 to 2015. The boom led to a decline in oil and fuel prices, and a dramatic fall in U.S. light oil imports. In addition, we find that the crude oil export ban, which was in place during a large part of this boom, was a binding constraint, and would likely have remained a binding constraint thereafter had the policy not been removed at the end of 2015.”

Below is a preliminary list of papers that will presented at this year’s AEA Annual Meeting on January 4-6 in Atlanta, Georgia.

On energy and everything else

• United States Internal Migration Networks, Energy Use, and Emissions – Paper
• Too Much Energy: The Perverse Effect of Low Energy Price – Paper
• Are Energy Executives Rewarded For Luck? – Paper
• United States Internal Migration Networks, Energy Use, and Emissions – Paper
• Structural Approach to Dynamic Energy Pricing and Consumer Welfare – Presentation
• Smart Thermostats, Social Information, and Energy Conservation: Distributional Evidence from a Field Experiment – AEA
• Quantifying Negative Externalities of Energy Infrastructure Using Wellbeing and Hedonic Price Data: Evidence from Biogas Plants – AEA
• Air Conditioning and Global Energy Consumption – AEA
• The Internal and External Costs of Renewable Intermittency – AEA
• The Interplay between Renewables and Hydrocarbons in the Energy Transition – AEA
• Innovation, Openness, and Energy Demand – AEA

On carbon, gas, oil, and shale

• Fracking, farmers, and rural electrification in India – Paper
• Effects of Severance Tax on Economic Activity: Evidence from the Oil Sector – Paper and Presentation
• Oil for Food? Oil Spills and Agricultural Productivity – Paper
• Welfare Gains from Market Insurance: The Case of Mexican Oil Price Risk – Paper
• Business Cycles and Innovation Cycles in the Upstream Oil & Gas Industry: Surviving the Ups and Downs – Presentation
• Learning Where to Drill: Drilling Decisions and Geological Quality in the Haynesville Shale – Paper and Presentation
• Shale Gaz Extraction in the United States: Perspectives from Geo-Located Twitter Conversations and Academic Publications – Presentation
• Relinquishing Riches: Auctions Versus “Wild West” Negotiations in Texas Oil and Gas Leasing – AEA
• Nonlinear Causal Relationship between Shale Oil Price and Employment in the United States: Evidence from a Nonlinear ARDL Approach – AEA
• The Potential for Peak Oil Demand – AEA
• Station Heterogeneity and the Dynamics of Retail Gasoline Prices  – AEA
• Bidding and Drilling Under Uncertainty: Identification and Estimation of Contingent Payment Auctions – AEA

On electricity

• Imperfect Markets Versus Imperfect Regulation in United States Electricity Generation – Paper
• Does Electrification Cause Industrial Development? Grid Expansion and Firm Turnover in Indonesia – Paper
• Do Reward and Reprimand Policies Reduce Electricity Distribution Losses? – Paper
• Optimization of a Prototype Electric Power System: Legacy Assets and New Investments – Paper and Presentation
• Dynamic Competition and Arbitrage in Electricity Markets: The Role of Financial Traders – Paper
• Ramping Up Renewable Energies: The Role of Ramping Cost and Electricity Storage – AEA
• Private and Social Costs of Misallocation in Indian Electricity Supply – AEA
• Testing for Market Efficiency with Transaction Costs: An Application to Financial Trading in Wholesale Electricity Markets – AEA

On electric vehicles

• Adoption of Electric Vehicles: Manufacturers’ Incentive and Government Policy – Paper
• Long-Term Transportation Electricity Use Considering the Effect of Autonomous-Vehicles: Estimates & Policy Observations – Paper
• Electric vehicles and residential energy consumption: An indirect rebound effect – AEA

On energy and policy

• Would Energy Tax Policy Significantly Influence the Diffusion Rate of The Renewable Energy Portfolio in The United States? – Paper and Presentation
• Impacts of Renewable Fuel Policy with Sentiment on the Energy and Agricultural Markets: A Vine Copula-based ARMA-GJR-GARCHX Model – Paper
• Using Emissions Trading Schemes to Reduce Heterogeneous Distortionary Taxes: the case of Recycling Carbon Auction Revenues to support Renewable Energy – Paper and Presentation
• Getting More of Something Without Subsidizing It: Impact of Time-of-Use Electricity Pricing on Residential Energy Efficiency and Solar Panel Adoption – AEA

On climate change and policy

• Market Power in Coal Shipping and Implications for U.S. Climate Policy – Paper
• Global Cost Estimates of Forest Climate Mitigation with Albedo: A New Integrative Policy Approach – Paper
• Unilateral Action under an Emissions Cap – Paper
• Climate Change Legislation and Social Values: Do They Complement or Substitute Each Other in Reducing Carbon Emissions? – AEA

On climate change and everything else

• Energy Efficiency and Directed Technical Change: Implications for Climate Change Mitigation – Paper
• Climate Risks of Sales Forecasts: Evidence from Satellite Readings of Soil Moisture – Paper and Presentation
• Climate Change Induced Inter-Province Migration in Iran – Paper
• Climate Finance under Conflicts and Renegotiations: A Dynamic Contract Approach – Paper
• Estimating the Impacts of Changes in Weather Circadian Rhythms on French Agricultural Production – Paper
• Heat and Learning – Paper
• Expectations and Adaptation to Environmental Risks – Paper
• Moving to Floodplains: The Unintended Consequences of the National Flood Insurance Program on Population Flows – Paper
• Salvation or Commodification? The Role of Money and Markets in Global Ecological Preservation – Paper
• Carbon Risk – Paper and Presentation
• Climate Change and Flood Beliefs: Evidence from New York Real Estate – Paper
• Climate Risks of Sales Forecasts: Evidence from Satellite Readings of Soil Moisture – Paper and Presentation
• The Effect of Local Pollution on the Cognitive Productivity of Judges: A Case Study of the Mexican Judiciary – AEA
• Creating comfort in a warming world: The role of smart thermostats – AEA
• Modeling System Complexity in the Context of Geopolitics Related to Climate Change – AEA
• Do Common-Pool Resources Help Insure Household Food Security from Climate Shocks? – AEA
• Malthus in Africa? Positive and Preventive Checks on Population in a Changing Climate – AEA
• Adaptation to Environmental Change: Agriculture and the Unexpected Incidence of the Acid Rain Program – AEA
• Ramping Up Renewable Energies: The Role of Ramping Cost and Electricity Storage – AEA
• Climate shocks, lake drying and children’s cognitive skills and violent behavior: Evidence from Chad – AEA
• A New Approach to Measuring Climate Change Impacts and Adaptation – AEA
• Learning, Adaptation and Climate Uncertainty: Evidence from Indian Agriculture – AEA

From a new working paper by Myunghyun Kim:

“This paper studies international transmission of U.S. monetary policy shocks to commodity exporters and importers. After first showing empirically that the shocks have stronger effects on commodity exporters than on importers, I then augment a standard three-country model to include commodities. Consistent with the empirical evidence, the model
indicates that an expansionary monetary policy shock to the U.S. increases the aggregate output of commodity exporters by more than that of importers. This is because the increased U.S. aggregate demand triggered by the shock leads to greater U.S. demand for commodities and higher real commodity prices, and thus the exports of commodity exporters increase relative to those of commodity importers. Furthermore, I show that if commodity exporters’ currencies are pegged to the U.S. dollar, then the U.S. monetary policy shocks have stronger spillovers to commodity exporters and importers. In the event that the U.S. becomes a net energy exporter, the shocks will have weaker effects on commodity exporters and stronger impacts on importers.”

From Conversable Economist:

“If carbon capture and storage was cheap and easy, it would be a technological fix for the issue of climate change. It’s not that simple, of course. But along with a range of other technologies and policies, carbon capture and storage can be part of the answer. In the Global Status of CCS 2018, the Global CCS Institute provides an overview of this technology (download requires free registration). The tone of the report is boosterish and upbeat about the technology–but it’s also full of facts and case studies and background about efforts currently underway.

Here are some main points:

When the Intergovernmental Panel on Climate Change develops scenarios for how the world economy limit carbon in the atmosphere in the next few decades, a major expansion of carbon capture and storage is baked into those forecasts. 

“In October 2018, the Intergovernmental Panel on Climate Change (IPCC) released its highly anticipated Special Report on Global Warming of 1.5 °C (SR15), reinforcing the role carbon capture and storage technology must play in beating climate change. … Significantly for CCS, it made the point that any remaining emissions would need to be balanced by removing CO2 from the air. CCS was acknowledged in three of all four pathways IPCC authors used to reach 1.5°C and was singled out for its ability to: `play a major role in decarbonising the industry sector in the context of 1.5°C and 2°C pathways, especially in industries with higher process emissions, such as cement, iron and steel industries.'”

There are a number of reasonably large-scale CCS facilities in operation, but they have naturally tended to pick the approaches that are already cost-effective. The question is whether CCS will spread into a much broader array of uses. 

There are now 43 commercial large-scale global CCS facilities, 18 in operation, 5 in construction and 20 in various stages of development. … The first-of-a-kind commercial CCS facilities addressed in this report have already been in operation for years, mostly in industrial applications. They are “low hanging fruit”  in terms of deployment – natural gas processing, fertiliser, ethanol production where CO2 capture is an inherent process of productions. There is still a swathe of industrial applications crying out for CCS application. There is also a wave of new innovations such as hydrogen with CCS, direct air capture, CCS hubs and clusters that need to be deployed. …”

Continue reading here.