Long-term implications of oil discoveries for international saving in a DSGE model

Possession and production of oil reserves affects the host country’s current account. Throughout the history of the North Sea oil, Norway ran persistent current account surpluses and accumulated public “oil funds.” The other major producer, the United Kingdom did not establish an oil fund. This work models how oil discoveries impact the current account. A small open economy DSGE model with an oil sector expresses the current account as a function of oil discoveries. In this model, an oil discovery creates a long-term borrowing-repayment-saving cycle. Some of the characteristics of the economy that affect oil-related decisions include: the presence of an oil fund, the equity home bias, and the technology of the oil industry. These characteristics are estimated structurally using the North Sea data for Norway and the United Kingdom. The estimation suggests that, upon discovering oil in the North Sea, the populations of Norway and the United Kingdom made similar economic choices but under different circumstances: Norway’s export revenues were amplified by a period of high oil prices in the 2000s, whereas the UK largely balanced its oil trade and did not benefit from the oil price. Similar decisions made under different circumstances led to remarkably different effects of oil discoveries on the current accounts.     

The effects of oil shocks on government expenditures and government revenues nexus (with an application to Iran's sanctions)

The main purpose of this study is to investigate the dynamic relationship between government revenues and government expenditures in Iran as a developing oil export based economy. Moreover, I want to know how oil price (revenue) shocks can affect this relationship. The results of the impulse response functions and variance decomposition analysis indicate that the contribution of oil revenue shocks in explaining the government expenditures is stronger than the contribution of oil price shocks. Moreover the results of the vector autoregression (VAR) and vector error correction (VEC) models show that the strong causality is running from government revenues to government expenditures (both current and capital) in Iranian economy while the evidence for the reverse causality is very weak. Overall the results support the revenue–spending hypothesis for Iran. My results imply that those sanctions aiming to restrict the Iranian government's oil export revenues, potentially can affect the government total expenditures as an important engine for developing the Iranian economy.     

Fiscal policy reforms in general equilibrium: The case of Greece

This paper quantifies the macroeconomic and welfare implications of (i) changes in the tax-spending mix and (ii) debt consolidation policies. The setup is a neoclassical growth model augmented with a relatively rich public sector. The model is calibrated to the Greek economy. The results suggest that, if the goal of fiscal policy is to stimulate the economy and increase welfare by changing the tax mix, then it should decrease the tax rate on labour income and increase the consumption tax rate. While higher public investment spending is good for the economy, it is lower public consumption spending that is found to be expansionary. The results also suggest that both tax- and expenditure-based debt consolidation policies lead to worse economic activity in the short run, but they have strong beneficial effects in the medium and long run when the consolidation period finishes.     

The Elephant In The Ground: Managing Oil And Sovereign Wealth

One of the most important developments in international finance and resource economics in the past twenty years is the rapid and widespread emergence of the $6 trillion sovereign wealth fund industry. Oil exporters typically ignore below-ground assets when allocating these funds, and ignore above-ground assets when extracting oil. We present a unified stylized framework for considering both. Subsoil oil should alter a fund’s portfolio through additional leverage and hedging. First-best spending should be a share of total wealth, and any unhedgeable volatility must be managed by precautionary savings. If oil prices are pro-cyclical, oil should be extracted faster than the Hotelling rule to generate a risk premium on oil wealth. Finally, we discuss how our analysis could improve the management of Norway’s fund in practice.     

The case of Japan: Price bargaining and controls on oil products

This paper shows how the Japanese variant of indicative planning has dealt with the oil crisis. Goals for leading export industries and for income distribution have been promoted through “administered competition” (a key policy in the strong economic growth of the 1960s) and pricing policies (including selective controls). The “price-bargaining” mechanism (aided by sociopolitical forces) has proved effective in oil products, even under floating exchange rates. One noteworthy policy alteration is the encouragement of sales in Japan by large foreign oil companies but under constraints that tie their interests more closely to those of Japan.     

Research on China’s export structure to the US: Analysis based on the US economic growth and exchange rate

Due to the rapid appreciation of RMB, the consistent declining of the US economy and other uncertain factors, China’s export volume to the United States has declined. The paper first chooses six industries to divide them into three groups based on per capita possession of capital, then employs the monthly data from 2001 to 2008 to carry out EG two-step cointegration test, and finally analyzes the impacts of the US economic growth and the exchange rate variability on different export industries. Empirical results show that the labor-intensive industries are most susceptible to fluctuations brought by economic growth and real exchange rate, while those industries with higher per capita possession of capital are less susceptible to external factors. In the short run, the export of labor-intensive products gives an advantage to China’s foreign trade development, but in the long-run, these industries will be affected greatly by various uncertain factors and the advantages of China’s labor-intensive export industries will disappear with the shift of the international division. Therefore, the only way to guarantee the dominant position of China’s foreign trade is to develop capital and technology intensive export industries and upgrade export structure.     

北京市高新技术产业投资基金建设研究

随着现代经济的发展，高新技术产业对经济增长起着重要的带动作用。产业投资基金作为一种集合投资、专家管理的投融资制度创新，有助于解决高新技术产业融资难的问题。由知识密集、技术密集的经济实体组成的高新技术产业集群，必将成为北京市未来经济发展的主导产业，而建设高新技术产业投资基金又将助推高新技术产业的发展。北京市高新技术产业已初具规模并亟待发展壮大，但其融资状况尚不理想，经济发展需要北京尝试将产业投资基金建设在北京市高新技术产业的发展上。这即是必要的，也是可行的，目前北京市的融资环境好、高新技术产业投资基金发展对资金需求旺盛、宏观环境以及相关立法日趋完善，国内外也有发展经验可供借鉴。在此基础上，本文提出北京市高新技术产业投资基金的建设思路，以期能够促进北京市高新技术产业的发展，同时可以促进我国科技与经济的结合，推动经济增长。     

Economic Growth in Canada and the United States: Supply‐Push or Demand‐Pull?

Understanding the nature of structural change and the sources of economic growth of an economy, especially the relative importance of different industries, is essential for policy‐making. This paper estimates industry contribution to economic growth in both Canada and the United States. It argues that industry contribution should be evaluated on the basis of the performance of an industry in terms of creating economic value relative to other industries. In particular, it calls for the quantity and the price effects, which is consistent with real GDP in the chained‐Fisher index that values the industry more when its price rises and less when its price declines. This is an important departure from the traditional methodologies that consider only quantity effect. This paper shows that the contribution from demand‐driven industries is significantly more than the finding based on traditional thinking.     

LIMITING U.S. OIL IMPORTS: COST ESTIMATES

The Energy Modeling Forum recently compared ten world oil models. This paper examines the costs of curtailing growth in U.S. oil imports based upon the supply and demand responses to price in six of these models. The analysis estimates direct resource costs over the 1989–2010 period from U.S. results for aflat and a rising price case spanning an $18 per barrel difference by the year 2000 and beyond. To provide a balanced perspective, the paper also includes estimates of some potential benefits from import-reduction policies. These benefits include smaller wealth transfers during a disruption and lower oil prices without disruptions. While keeping future oil imports at today's level appears to be quite costly, the results here indicate that less aggressive import-reduction programs offer some opportunity for economic gain.     

Franchise fee,contract bargaining,and economic growth

This paper combines the industrial organization (IO) theory and the R&D-based endogenous growth theory in a model of a successive imperfect competitive economy. The current study assumes that firms between upstream and downstream industries bargain over both the price of intermediate goods and the franchise fee. Findings show that the intermediate goods firm with a R&D sector charges the price equal to the marginal cost. Economic rent may also be partly transferred into the franchise fee determined by the relative bargaining power. In particular, the traditional double marginalization result, such as in Spengler (1950), does not take place here due to the above-mentioned bargaining scheme. Finally, this work shows that final goods firms in vertically linked industries play an important role in an economic growth model. The more bargaining power the final goods firms have (or the more returns to specialization upstream firms have, or the less substitution elasticity the final goods have), the more the economy grows. However, the consumer preference for diversity seemingly does not affect economic growth rate.     

国际油价波动对经济增长的影响——基于中国的实证分析

基于1990年1月至2009年3月的月度数据,本文实证分析了我国经济增长与国际石油价格之间的长期变动关系,其特点在于,采用稳健性较强的T-Y因果检验来分析油价与经济增长的Granger因果关系,同时,运用非对称协整技术以考察油价与经济增长之间的非线性关系。研究发现：①长期中油价是我国经济增长的单向Granger原因;②油价与我国经济增长之间存在非对称协整关系,油价上涨对经济活动的负面影响大于油价下跌的积极影响。基于中国经济运行的实际,本文还分析了实证结果背后的原因,并提出当前国际金融危机背景下,油价呈下跌趋势,需抓住有利时机,动用外汇储备,大力购入石油资源,建立起石油战略储备;在经济复苏、油价上涨时,可以启动石油战略储备来减少石油供应冲击,从而有助于及时保证我国经济平稳快速增长的政策建议。     

Reexamination of Economic Growth, Tax Policy, and Distributive Politics

The paper examines the relationship between economic growth, tax policy, and distribution of capital and labor ownership in a one‐sector political‐economy model of endogenous growth with productive government spending financed by a proportional tax on capital income. The analysis shows that inequality in wealth and income can be positively or negatively related to the optimal tax rate. In either environment, higher inequality leads to a lower after‐tax return to capital, thereby reducing the economy's growth rate.     

America’s flawed paradigm: macroeconomic causes of the financial crisis and great recession

This paper traces the roots of the financial crisis and Great Recession to a flawed U.S. macroeconomic paradigm that was adopted around 1980 with the triumph of neoliberal economics. One flaw concerns the growth model. A second flaw concerns the model of global economic engagement that created a triple economic hemorrhage of spending on imports, manufacturing job losses, and off-shoring of investment. The new growth model hollowed out the economy and relied on growing debt and asset price inflation. As the process deepened the economy needed ever larger bubbles to grow. Financial deregulation and excess kept the model going longer than expected, but it meant the economy experienced a financial crash and deeper collapse when the contradictions finally surfaced. The United States needs a new economic paradigm and a new growth model, but as yet this challenge has received little attention from policymakers or economists.     

正确把握经济走势实现平稳快速增长

2003年中国经济增长存在有局部过热的特点。新一轮经济增长周期是我们在社会主义市场经济体制下宏观调控中遇到的第一个重要关口。局部过热会引起局部的、结构性物价上涨。而若发展到全局过热,仍会引起全面的通货膨胀。因此,要适时适度地进行宏观调控,保持经济继续平稳、较快地增长;在微观层面上,企业要有应对市场的安全应急机制。     

Growth, Trade, and Government Policies of a Small Open Economy

Utilizing a linear endogenous growth model, the paper provides an economic rationale for two empirical findings: the positive correlation between export growth and income growth, and the association of rapid structural changes with fast income growth. In the benchmark case, the small open economy converges eventually to a balanced growth path along which exports and total output grow at the same constant rate as consumption. Government policies affect the pattern of specialization and trade since they change the autarky or foreign relative price. Only taxation on the capital goods sector can affect asymptotic growth rates.     

Income Tax, Property Tax, and Tariff in a Small Open Economy

Why do some countries enjoy high economic growth rates while some suffer in “low-growth traps”? Why are tax policies in different countries so different? Some suggest that it is exactly these differences in government policies which contribute to the difference in economic growth rates. This paper considers a small open economy which sustains its economic growth by adopting new technologies. When the value of initial wealth is “relatively small,” policies which promote growth most result in the highest welfare. In other cases, policies that discourage growth most may be welfare-maximizing.     

Aggressive oil extraction and precautionary saving: Coping with volatility

The effects of stochastic oil demand on optimal oil extraction paths and tax, spending and government debt policies are analyzed when the oil demand schedule is linear and preferences quadratic. Without prudence, optimal oil extraction is governed by the Hotelling rule and optimal budgetary policies by the tax and consumption smoothing principle. Volatile oil demand brings forward oil extraction and induces a bigger government surplus. With prudence, the government depletes oil reserves even more aggressively and engages in additional precautionary saving financed by postponing spending and bringing taxes forward, especially if it has substantial monopoly power on the oil market, gives high priority to the public spending target, is very prudent, and future oil demand has high variance. Uncertain economic prospects induce even higher precautionary saving and, if non-oil revenue shocks and oil revenue shocks are positively correlated, even more aggressive oil extraction. In contrast, prudent governments deliberately underestimate oil reserves which induce less aggressive oil depletion and less government saving, but less so if uncertainty about reserves and oil demand are positively correlated.     

产业政策中的资金配置:市场力量与政府扶持

产业政策具有重要的国家战略意义,如何有效引导经济资源流向政策支持产业,是产业政策发挥成效的关键.现有相关研究未深入考察经济资源在扶持行业之间及行业内部配置的规律,而且没有综合探讨不同资金配置的关联.文章考察了市场力量与政府扶持两种机制如何引导产业政策下的资金配置.研究发现,产业政策支持的企业获得了更多的债务融资和政府补助.其中,债务融资更多地流向了成长行业中规模较大的企业,政府补助使成长行业中的小规模企业和成熟行业中的大规模企业受益更多.研究结果表明,市场看重企业的增长机会,政府补助则会顾及当前成长性较弱而相对不受市场青睐的企业,对产业政策下的市场化资金配置起到了补充作用.文章的研究为如何协调市场机制和政府扶持两种力量提供了一定的借鉴.     

Paradox of plenty: Norway’s macroeconomic policy dilemmas during the oil price crash, 2014-15

Norway, a country at the top of global rankings in terms of gross domestic product (GDP) per capita and human development was also in an enviable position with large current account and fiscal surpluses, as well as a massive stock of public assets. Then came a shock; between June 2014 and early 2016 oil prices tumbled by more than 70 percent. As a major oil exporter, Norway’s current account was severely impacted but could this actually draw Norway into a macroeconomic crisis? Couldn’t it just fund its way out of the contractionary pressures building up in the economy using its stock of foreign currency reserves being held in a sovereign wealth fund? This article explores the fiscal and monetary policy challenges that Norway faced in preempting falling GDP growth and rising unemployment while at the same time, warding off a housing bubble going bust.     

经济增长、地区收入差距与公共支出

建立包含公共基础设施的两地区内生增长模型,将公共支出政策纳入统一的分析框架,同时合并考虑政府调控的各种支出手段对区域发展的综合影响。该模型表明与转移支付和传统的区域政策相对照,旨在减少革新成本的公共支出政策能提高经济增长率,同时促进区域间平等。