In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers including US shale oil out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors that can rationalize such a "regime switch" by OPEC. These include: (i) the growth of US shale oil production; (ii) the slowdown of global oil demand; (iii) reduced cohesiveness of the OPEC cartel; (iv) production ramp-ups in other non-OPEC countries. We show that these qualitative predictions are broadly consistent with oil market developments during 2014-15. The model is calibrated to oil market data; it predicts accommodation up to 2014 and a market-share strategy thereafter, and explains large oil-price swings as well as realistically high levels of OPEC output.
This paper proposes a methodology for analyzing dynamic misalignment in managed exchange rate systems that combines the estimation approach to modeling the real exchange rate with the calibration approach to generating the equilibrium real exchange rate. The methodology is applied to the Thai baht and the model is estimated using only pre-July 1997 data. An analysis of the difference between the evolution of the actual real exchange rate and the generated equilibrium rate - the misalignment gap - reveals the extent to which the market was persistently factoring in an expected depreciation of the Thai baht.
useful because it suggests the possibility of a forthcoming structural realignment. For these reasons, the analysis of the misalignment gap in this paper is dynamic. 9
Another way to enhance the computation of misalignment is to exploit the best features of the estimation and calibrationapproaches. In the following sections, a model of the real exchange rate is proposed which utilizes estimation techniques (to ensure that the determinants are empirically valid) and calibration techniques (to ensure that the equilibrium values of the determinants are defined relative
The First Millennium Development Goal (MDG#1) is to cut the fraction of global population living on less than one dollar per day in half, by 2015. Foreign aid financed investments may contribute to the attainment of this goal. But how much can aid be reasonably expected to accomplish? A widespread calibration approach to answering this question is to employ the so-called development planning technique, which has the Harrod-Domar growth model at its base. Two particularly problematic assumptions in this sort of analysis are the absence of diminishing returns to capital input and an infinite speed of adjustment to steady state after a shock to the economy. We remove both of these assumptions by employing a Solow model as an organizing framework for an otherwise similar analysis. We find that in order to successfully meet the MDG#1 in the context of the currently proposed aid flows, these flows will have to be accompanied by either an acceleration in the underlying productivity growth rate or a major boost to domestic savings and investment in sub-Saharan Africa. In the absence of such changes in the economic environment, the MDG#1 is unlikely to be reached.
tack by adopting a theory-based calibrationapproach. Essentially, we incorporate aid into basic models of growth, set the parameters in those models to plausible values on which basis we calibrate the necessary amounts of aid so as to attain MDG#1. This exercise is in the tradition of “development planning” as practiced by Leontieff (1963) , Chenery and Stout (1966) , and many others, forming the backbone of theoretical support for aid flows in many development agencies, most prominently the World Bank (see Easterly, 1999 ). However, our approach differs from the
International Monetary Fund. Western Hemisphere Dept.
1. Fiscal Rules Around the World
2. Debt Anchor Calibration: Approach 2
3. Debt Anchor Calibration: Approach 3
4. Allowing Space for Countercyclical Policy
5. Net Debt Path
AN OVERVIEW OF THE BAHAMIAN LABOR MARKET
A Snapshot of the Bahamian Labor Market
B. Recent Developments in the Labor Market
C. Empirical Assessment of Labor Market Flexibility
1. Literature Review on Apprenticeship Programs
1. Severance Notice and Payment
STRENGTHENING NATURAL DISASTER