VoxEU: The trade consequences of the oil price

Former OxCARRE researchers Pierre-Louis Vézina (King's College, London) and David van Below (Copenhagen Economics) write on VoxEU,

The trade consequences of the oil price

The price of oil rose to unprecedented highs in the 2000s, and its recent plunge took many by surprise. Although there are many consequences of such price fluctuations on the world economy, they are notoriously difficult to pin down. This column examines the trade consequences of varying shipping costs caused by oil price fluctuations. High oil prices are found to increase the distance elasticity of trade, making trade less global. The recent drop in oil prices could thus be a boon for globalisation.

Read on here 

New OxCARRE Research Papers

Rabah Arezki [imf.org], Patrick Bolton [columbia.edu], Sanjay Peters [columbia.edu, Copenhagen Business School], Frederic Samama (Amundi Asset Management) & Joseph Stiglitz [columbia.edu, Columbia University] write on

From Global Savings Glut to Financing Infrastructure: The Advent of Investment Platforms

Abstract

This paper investigates the emerging global landscape for public-private coinvestments in infrastructure. The creation of the Asian Infrastructure Investment Bank and other so-called “infrastructure investment platforms” are an attempt to tap into the pool of both public and private long-term savings in order to channel the latter into much needed infrastructure projects. This paper puts these new initiatives into perspective by critically reviewing the literature and experience with public private partnerships in infrastructure. It concludes by identifying the main challenges policy makers and other actors will need to confront going forward and to turn infrastructure into an asset class of its own.

Full paper at OxCARRE website here [pdf, oxcarre.ox.ac.uk].


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Rabah Arezki [imf.org] and Thiemo Fetzer [University of Warwick trfetzer.com] write on


On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution

This paper provides the first empirical evidence of the newly found comparative advantage of the United States manufacturing sector following the so-called shale gas revolution. The revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world owing to the physics of natural gas. Results show that U.S. manufacturing exports have grown by about 6 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.

Full paper at OxCARRE website here [pdf, oxcarre.ox.ac.uk].

New Research: Blocking the Pathway Out of the Resource Curse

A new working paper by Anar K. Ahmadov [ox.ac.uk], on

Blocking the pathway out of the resource curse: What hinders diversification in resource-rich developing countries?
Abstract:

This essay assesses the impact of geographic factors, trade openness and political institutions on one of the key possible avenues for addressing the “resource curse”: export diversification. It does so with refined data spanning 1960-2010 and in a single framework that uses instrumental variables approach to tackle endogeneity, omitted variable bias and measurement error issues that characterize many studies of the resource curse. The results show that natural resource-rich developing countries are less likely to achieve export diversity the more autocratic institutions they have, particularly weak executive constraints and low legislative effectiveness; the weaker the rule of law; if they are located in the Middle East or Africa; if they are landlocked or mountainous; and the richer they are in oil, but not in other resources. On the other hand, the quality of government and competitiveness of political participation do not predict export concentration. There is also little evidence to support the view that trade integration, trade policy and tariff rates matter for export concentration in this set of countries. While neither colonial experiences under British or French rule, nor having legal systems designed under English Common Law or French Commercial Code have significant effects, resource-rich developing countries with past socialist institutions are significantly more likely to have more concentrated exports. Population size, ethnic or religious fractionalization, and human capital do not seem to affect the diversity of exports. Finally, unlike oil wealth, abundance in non-fuel minerals, coal, and forest resources is associated with higher export diversity.

Available here [globaleconomicgovernance.org]