Publication: Global Footprints of U.S. Energy Innovations: Energy Efficiency and the Shale Revolution
Date
2023-04-17
ISSN
Published
2023-04-17
Author(s)
Zahid, Hamza
Abstract
This paper studies the effects of
U.S. energy shocks on international economic activity and
the world oil market. The analysis uses a set of
factor-augmented vector autoregressions to identify and
compare the impact of unanticipated changes in U.S. energy
efficiency and U.S. oil supply over 1980Q1–2019Q4. The
identification strategy relies on the fact that positive
shocks in both cases decrease the real price of oil and
increase global gross domestic product (GDP), while
generating opposite implications for world oil production
and consumption. On average, U.S. energy efficiency shocks
have a larger impact on the real price of oil and global GDP
than U.S. oil supply shocks. Historical decompositions
suggest that in 2010–19, U.S. oil supply shocks increased
GDP by 2 percent, while (negative) energy efficiency shocks
decreased global GDP by 1.3 percent. The latter effect
dominated during the second shale boom in 2017–19.
Considerable heterogeneity exists in cross-country
responses, with favorable implications for GDP in advanced
and emerging market oil importers and adverse implications
for oil exporters. The empirical findings are interpreted
through the lens of a dynamic general equilibrium
multi-country model that features a global oil market and
where key parameters are estimated using indirect inference.
Link to Data Set
Citation
“Zahid, Hamza. 2023. Global Footprints of U.S. Energy Innovations: Energy Efficiency and the Shale Revolution. Policy Research Working Papers; 10402. © World Bank, Washington, DC. http://hdl.handle.net/10986/39699 License: CC BY 3.0 IGO.”