How Much Does an Increase in Oil Prices Affect the Global Economy? Some Insights from a General Equilibrium Analysis
A global computable general equilibrium model is used to analyze the economic impacts of rising oil prices with endogenously determined availability of biofuels to mitigate those impacts. The negative effects on the global economy are comparable to...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/06/17935117/much-increase-oil-prices-affect-global-economy-some-insights-general-equilibrium-analysis http://hdl.handle.net/10986/15874 |
| Summary: | A global computable general equilibrium
model is used to analyze the economic impacts of rising oil
prices with endogenously determined availability of biofuels
to mitigate those impacts. The negative effects on the
global economy are comparable to those found in other
studies, but the impacts are unevenly distributed across
countries/regions or sectors. The agricultural sectors of
high-income countries, which are relatively energy
intensive, would suffer more from rising oil prices than
would those in lower-income countries, whereas the reverse
is true for the impacts across manufacturing sectors. The
impacts are especially strong for oil importers with
relatively energy-intensive manufacturing and trade, such as
India and China. Although the availability of biofuels does
mitigate some of the negative impacts of rising oil prices,
the benefit is small because the capacity of biofuels to
economically substitute for fossil fuels on a large scale
remains limited. |
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