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Aggregate impacts of recent U.S. natural gas trends

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  • Arora, Vipin

Abstract

Predictions about the macroeconomic impacts of recent U.S. natural gas trends vary widely. I re-evaluate the possible effects on U.S. economic activity using a standard general equilibrium model. Within this framework I show that increases in natural gas supply result in small-to-moderate economic gains, even with unemployment or under-utilized capital. Subsequent rises in economy-wide productivity are the key to magnifying the economic impacts of greater natural gas supply and resources. The 1995-2000 period, where U.S. productivity growth was driven by information technology, is a good starting point for comparing how American productivity may evolve because of natural gas.

Suggested Citation

  • Arora, Vipin, 2013. "Aggregate impacts of recent U.S. natural gas trends," MPRA Paper 43708, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:43708
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    References listed on IDEAS

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    1. Kinnaman, Thomas C., 2011. "The economic impact of shale gas extraction: A review of existing studies," Ecological Economics, Elsevier, vol. 70(7), pages 1243-1249, May.
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    7. Kevin L. Kliesen, 2006. "Rising natural gas prices and real economic activity," Review, Federal Reserve Bank of St. Louis, vol. 88(Nov), pages 511-526.
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    Cited by:

    1. Arora, Vipin, 2017. "Shale and the US Economy: Three Counterfactuals," MPRA Paper 79672, University Library of Munich, Germany.
    2. Arora, Vipin, 2018. "Natural Gas and the US Economy: Some Preliminary Rules of Thumb," MPRA Paper 87279, University Library of Munich, Germany.
    3. Vipin Arora and Jozef Lieskovsky, 2014. "Natural Gas and U.S. Economic Activity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).

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    More about this item

    Keywords

    Natural gas; general equilibrium; unemployment; variable capacity; shale; productivity;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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