Work

On the comparative advantage of U.S. manufacturing: Evidence from the shale gas revolution

Year: 2017

Type: article

Abstract: This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on U.S. manufacturing production and trade. The shale gas revolution has led to (very) large and persistent differences in the price of natural gas between the U.S. and the rest of the world reflecting differences in endowment of difficult-to-trade natural gas. Guided by economic theory , empirical tests on output, factor reallocation and international trade are conducted. Results show that U.S. manufacturing exports have grown by about 10% on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.

Source: Journal of International Economics

DOI: 10.1016/j.jinteco.2017.03.002

Authors: Rabah Arezki, Thiemo Fetzer, Frank Pisch

Institutions: International Monetary Fund, University of Warwick, London School of Economics and Political Science

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $4,300

Funders: Fetzer Institute, London School of Economics and Political Science, University of Warwick, Economic and Social Research Council