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Aggregate impacts of recent U.S. natural gas trends

Authors
Publication Date
Keywords
  • E27 - Forecasting And Simulation: Models And Applications
  • E17 - Forecasting And Simulation: Models And Applications
  • D24 - Production
  • Cost
  • Capital
  • Capital
  • Total Factor
  • And Multifactor Productivity
  • Capacity
  • Q43 - Energy And The Macroeconomy
Disciplines
  • Economics

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.

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