Macroeconomics and oil-supply disruptions

Technical Report · Wed Apr 01 00:00:00 EST 1981

OSTI ID:6306153

Hubbard, R G; Fry, Jr, R C

Energy-economy interactions and domestic linkages have been used in a system of models. Domestic economic aggregates are linked with a model of the world oil market by a core macroeconomic model with real and financial sectors. The model can be used to examine the policy ramifications of various short-run scenarios. Demand factors are not taken as exogenous to the world oil market, nor are oil prices taken as exogenous to the US economy. Simulations of the model have generated endogenous cycles in the world oil market; which then affect the US economy primarily through output and inflation channels. Policy simulation was centered around the short-run imposition of a disruption tariff. The disruption tariff exhibited at least some of the desirable features noted by its proponents, though it did not function as a shield against the short-run output loss forced by the disruption. One might also simulate the rebate of tariff revenues as a reduction in the social security payroll tax. Other possible simulations include the use of any of the fiscal and monetary instruments included in the model. The effectiveness of these other policy instruments will be examined in a later paper.

• Research Organization: Harvard Univ., Cambridge, MA (USA). Energy and Environmental Policy Center
• DOE Contract Number: AC01-80PE70278
• OSTI ID: 6306153
• Report Number(s): DOE/PE/70278-T17; ON: DE81025580
• Country of Publication: United States
• Language: English

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