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Research Details
A World Equilibrium Model of the Oil Market, Review of Economic Studies
Abstract
We use a new micro data to compile some key facts about the oil market and estimate a structural industry equilibrium model that is consistent with these facts. Our model implies that demand and supply shocks contribute equally to the volatility of oil prices but that the volatility of investment by oil firms is driven mostly by demand shocks. Our model predicts that the advent of fracking will eventually result in a large reduction in oil price volatility.
Type
Article
Author(s)
Sergio Rebelo, Gideon Bornstein, Per Krusell
Date Published
2021
Citations
Rebelo, Sergio, Gideon Bornstein, and Per Krusell. 2021. A World Equilibrium Model of the Oil Market. Review of Economic Studies.
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