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The General Equilibrium Effects of the Shale Revolution

Eife, Thomas

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Abstract

The shale revolution is gradually transforming the industrial structure of the United States. This paper quantifies these changes in a model in which industries are linked by productivity linkages. In this framework, productivity gains in one industry may spill over to other industries. For 2015 (the most recent data available), we find that the shale revolution raised US relative wages by around 0.84 percent, whereas Mexican and Canadian wages declined by 1.12 and 1.43 percent, respectively. Judging by countries’ ability to sell goods to the US, China is the main beneficiary of the shale revolution with increased US exports of more than $14 billion (7 percent) in 2015. At the same time, the US automobile industry lost sales of more than $65 billion (almost 10 percent) because of the shale revolution.

Item Type: Working paper
Series Name: Discussion Paper Series / University of Heidelberg, Department of Economics
Volume: 0694
Place of Publication: Heidelberg
Date Deposited: 13 Nov 2020 15:52
Date: November 2020
Number of Pages: 63
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Controlled Keywords: Strukturwandel
Uncontrolled Keywords: structural change, shale revolution, industry linkages, Ricardian trade, oil and gas production
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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