Showing papers on "Boom published in 2013"

Time-Varying Effects of Oil Supply Shocks on the US Economy

Abstract: We investigate how the dynamic eects of oil supply shocks on the US economy have changed over time. We …rst document a remarkable structural change in the oil market itself, i.e. a considerably steeper, hence, less elastic oil demand curve since the mid-eighties. Accordingly, a typical oil supply shock is currently characterized by a much smaller impact on world oil production and a greater eect on the real price of crude oil, but has a similar impact on US output and in‡ation as in the 1970s. Second, we …nd a smaller role for oil supply shocks in accounting for real oil price variability over time, implying that current oil price ‡uctuations are more demand driven. Finally, while unfavorable oil supply disturbances explain little of the "Great In‡ation", they seem to have contributed to the 1974/75, early 1980s and 1990s recessions but also dampened the economic boom at the end of the millennium.

A Retrospective Review of Shale Gas Development in the United States: What Led to the Boom?

Abstract: This is the first academic paper that reviews the economic, policy, and technology history of shale gas development in the United States. The primary objective of the paper is to answer the question of what led to the shale gas boom in the United States to help inform stakeholders in those countries that are attempting to develop their own shale gas resources. This paper is also a case study of the incentive, process, and impact of technology innovations and the role of government in promoting technology innovations in the energy industry. Our review finds that government policy, private entrepreneurship, technology innovations, private land and mineral rights ownership, high natural gas prices in the 2000s, and a number of other factors all made important contributions to the shale gas boom.

A Nation of Gamblers: Real Estate Speculation and American History

Abstract: The great housing convulsion that buffeted America between 2000 and 2010 has historical precedents, from the frontier land boom of the 1790s to the skyscraper craze of the 1920s. But this time was different. There was far less real uncertainty about fundamental economic and geographic trends, making the convulsion even more puzzling. During historic and recent booms, sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices. The recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices, whether for cotton in Alabama in 1820 or land in Las Vegas in 2006. Buyers don't appear to be irrational but rather cognitively limited investors who work with simple heuristic models, instead of a comprehensive general equilibrium framework. Low interest rates rarely seem to drive price growth; under-priced default options are a more common contributor to high prices. The primary cost of booms has not typically been overbuilding, but rather the financial chaos that accompanies housing downturns.

The Baby Boom and Its Causes: What We Know and What We Need to Know

Abstract: This study analyzes the timing, magnitude, and volume of the mid-twentieth century baby boom in European and non-European Western countries. The baby boom is found to have been especially strong in the non-European countries, fairly strong in some European countries, and quite weak in others. While the boom has often been linked with postwar economic growth and the recuperation of births postponed during the Depression era, we argue that this is only a limited part of the story. In most cases the recovery of the birth rate started well before the end of World War II, a fact not accounted for by existing theories. We investigate the roles played by the recovery of period as well as cohort fertility, the underlying marriage boom, and the recovery of marital fertility. We identify major puzzles for future research, including the reasons for strongly declining ages at marriage and the role played by contraceptive failure in the rise of high-parity births.

Manufacturing Decline, Housing Booms, and Non-Employment

Abstract: We assess the extent to which manufacturing decline and housing booms contributed to changes in U.S. non-employment during the 2000s. Using a local labor market design, we estimate that manufacturing decline significantly increased non-employment during 2000-2007, while local housing booms decreased non-employment by roughly the same magnitude. The effects of manufacturing decline persist through 2011, but we find no persistent non-employment effects of local housing booms, most plausibly because housing booms were associated with subsequent busts of similar magnitude. We also find that housing booms significantly reduce the likelihood that displaced manufacturing workers remain non-employed, suggesting that housing booms "mask" non-employment growth that would have otherwise occurred earlier in the absence of the booms. Applying our estimates to the national labor market, we find that housing booms reduced non-employment growth by roughly 30 percent during 2000-2007 and that roughly 40 percent of the aggregate increase in non-employment during 2000-2011 can be attributed to manufacturing decline. Collectively, our results suggest that much of the non-employment growth during the 2000s can be attributed to manufacturing decline and these effects would have appeared in aggregate statistics earlier had it not been for the large, temporary increases in housing demand.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Booms and Systemic Banking Crises

Abstract: The empirical literature on systemic banking crises (SBCs) has shown that SBCs are rare events that break out in the midst of credit intensive booms and bring about particularly deep and long-lasting recessions. We attempt to explain these phenomena within a dynamic general equilibrium model featuring a non-trivial banking sector. In the model, banks are heterogeneous with respect to their intermediation skills, which gives rise to an interbank market. Moral hazard and asymmetric information on this market may generate sudden interbank market freezes, SBCs, credit crunches and, ultimately, severe recessions. Simulations of a calibrated version of the model indicate that typical SBCs break out in the midst of a credit boom generated by a sequence of positive supply shocks rather than being the outcome of a big negative wealth shock. We also show that the model can account for the relative severity of recessions with SBCs and their longer duration.

A Nation of Gamblers: Real Estate Speculation and American History

Abstract: The great housing convulsion that buffeted America between 2000 and 2010 has historical precedents, from the frontier land boom of the 1790s to the skyscraper craze of the 1920s. But this time was different. There was far less far less real uncertainty about fundamental economic and geographic trends, making the convulsion even more puzzling. During historic and recent booms, sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices. The recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices, whether for cotton in Alabama in 1820 or land in Las Vegas in 2006. Buyers don’t appear to be irrational but rather cognitively limited investors who work with simple heuristic models, instead of a comprehensive general equilibrium framework. Low interest rates rarely seem to drive price growth; under-priced default options are a more common contributor to high prices. The primary cost of booms has not typically been overbuilding, but rather the financial chaos that accompanies housing downturns.

Boom, Bust, Recovery: Forensics of the Latvia Crisis

Abstract: Latvia’s boom, bust, and recovery provide a rare case study for macroeconomists: an economy that responded to a balance-of-payments crisis by maintaining its currency peg and adjusting through internal devaluation and front-loaded consolidation. This paper lays down the facts about Latvia’s boom and bust and analyzes the policy response and the mechanics of the adjustment through internal devaluation. While Latvia’s adjustment was very costly, with a large drop in output, a big increase in unemployment, and substantial emigration, it was eventually successful. The internal devaluation worked faster, though quite differently, than what had been expected. Productivity increases, rather than nominal wage cuts, drove much of the unit labor cost reduction. These then led to an increase in profit margins, rather than a decrease in prices, and to a surprisingly fast supply response. The strong front-loaded adjustment did not prevent the recovery. The lessons of the Latvian experience for other countries may however be limited, since many of the elements of the eventual success appear to have been due to factors largely specific to Latvia, factors that are not present in southern euro countries, in particular.

From Boom to Bust: A Typology of Real Commodity Prices in the Long Run

Abstract: This paper considers the evidence on real commodity prices over 160 years for 30 commodities representing 7.89 trillion USD worth of production in 2011. In so doing, it suggests and documents a complete typology of real commodity prices, comprising long-run trends, medium-run cycles, and short-run boom/bust episodes. The findings of the paper can be summarized as follows: real commodity prices of both energy and non-energy commodities have been on the rise from 1950 across all weighting schemes; there is a consistent pattern, in both past and present, of commodity price super-cycles which entail decades-long positive deviations from these long-run trends with the latest set of super-cycles likely at their peak; these commodity price super-cycles are punctuated by booms and busts which are historically pervasive and becoming more exacerbated over time. These last elements of boom and bust are also found to be particularly bearing in determining real commodity price volatility as well as potentially bearing in influencing growth in commodity exporting economies.

The shale oil boom: a u.s. phenomenon

Abstract: Statements and views expressed in this discussion paper are solely those of the author and do not Leonardo Maugeri has been a top manager of Eni (the sixth largest multinational oil company), where he held the (Praeger, 2010). Both books were named " Outstanding Academic Titles " by Choice Review. In June 2012, the Belfer Center published Maugeri paper, " Oil: The Next Revolution, " which received worldwide attention. The study forecast a dramatic increase in the world's oil production capacity to 2020 driven by an unnoticed growth of field-by-field production capacity worldwide. Acknowledgements During the course of this study, I have accumulated an abiding debt to several people and institutions. First and foremost, I owe a debt of gratitude to the Harvard Kennedy School and the Belfer Center for Science and International Affairs. This study was made possible with support from the Roy Family Fellowship, in the Belfer Center's Environment and Natural Resources Program (ENRP). I would like to thank Henry Lee, ENRP's director, who offered advice and reviewed this study. I would like to thank Meghan O'Sullivan, who invited me to join the Geopolitics of Energy Project at the Harvard Kennedy School and also reviewed this study, and Graham Allison, whose interest in my work served as a continuous stimulus. Two institutions in particular deserve a special mention: the North Dakota Department of Mineral Resources and the Texas Railroad Commission, whose data were essential for the completion of this study. Many others helped me through occasional suggestions, advice, remarks, and data cross-checking. To all of them I convey my gratitude as well as my apologies if I failed to capture the depth of their observations.

Housing Market Failure in a Booming Economy

Abstract: This paper presents national data and two case studies investigating the links between housing market failure and the context of Australia's recent resource mining boom. It demonstrates how unprecedented international demand for mineral resources resulted in critical, local housing issues in mining communities. We conclude that without careful strategic planning and understanding of the economic and social role of housing, international market dynamics can create local housing situations that are vulnerable to market and social failures. While this paper highlights the challenges inherent in managing housing issues in Australia during a mining boom, there are likely to be lessons which can be applied in international settings. These challenges include the diversity in scale, cyclical and often unpredictable nature of booms; differences in housing policy and institutional arrangements across jurisdictions and the importance of leadership in growth management and planning.

The Resources Boom and Economic Policy in the Long Run

Abstract: Australia's current resources boom has three elements: high terms of trade, strong investment and increased resource exports. For a decade, the net effect has been strongly positive: the boost to incomes and activity from the first two has more than offset the impact of the high Australian dollar. But, both resource investment and the terms of trade will fall in due course and the economy will face a major deflationary shock. A sustained policy response will be needed that recognises the limits of monetary policy and hence involves fiscal stimulus, together with innovative approaches to ensure that infrastructure investment rises rapidly.

Does Expansionary Monetary Policy Cause Asset Price Booms? Some Historical and Empirical Evidence

Abstract: In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with asset price booms. Using a panel of up to 18 OECD countries from 1920 to 2011 we estimate the impact that loose monetary policy, low inflation, and bank credit has on house, stock and commodity prices. We review the historical narratives on asset price booms and use a deterministic procedure to identify asset price booms for the countries in our sample. We show that “loose” monetary policy – that is having an interest rate below the target rate or having a growth rate of money above the target growth rate – does positively impact asset prices and this correspondence is heightened during periods when asset prices grew quickly and then subsequently suffered a significant correction. This result was robust across multiple asset prices and different specifications and was present even when we controlled for other alternative explanations such as low inflation or “easy” credit.

Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence

Abstract: In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with asset price booms. Using a panel of up to 18 OECD countries from 1920 to 2011 we estimate the impact that loose monetary policy, low inflation, and bank credit has on house, stock and commodity prices. We review the historical narratives on asset price booms and use a deterministic procedure to identify asset price booms for the countries in our sample. We show that "loose" monetary policy - that is having an interest rate below the target rate or having a growth rate of money above the target growth rate - does positively impact asset prices and this correspondence is heightened during periods when asset prices grew quickly and then subsequently suffered a significant correction. This result was robust across multiple asset prices and different specifications and was present even when we controlled for other alternative explanations such as low inflation or "easy" credit.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Parallel boosting with momentum

Abstract: We describe a new, simplified, and general analysis of a fusion of Nesterov's accelerated gradient with parallel coordinate descent. The resulting algorithm, which we call BOOM, for boosting with momentum, enjoys the merits of both techniques. Namely, BOOM retains the momentum and convergence properties of the accelerated gradient method while taking into account the curvature of the objective function. We describe a distributed implementation of BOOM which is suitable for massive high dimensional datasets. We show experimentally that BOOM is especially effective in large scale learning problems with rare yet informative features.

What Explains House Price Booms?: History and Empirical Evidence

Abstract: In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with house price booms. Using a panel of 11 OECD countries from 1920 to 2011 we estimate a panel VAR in order to identify shocks that can be interpreted as loose monetary policy shocks, low inflation shocks, bank credit shocks and house price shocks. We show that loose monetary policy played an important role in housing booms along with the other shocks. We show that during boom periods there is a heightened impact of all three "policy" shocks with the bank credit shock playing an important role. However, when we look at individual house price boom episodes the cause of the price boom is not so clear. The evidence suggests that the house price boom that occurred in the US during the 1990s and 2000s was not due to easy bank credit. Loose monetary policy (as well as low inflation) played some role but the residual which may be picking up other factors such as financial innovation and the shadow banking system is the most important shock. This result is robust to many alternative specifications.

Rapid credit growth in emerging markets: : boon or boom-bust?

Abstract: Episodes of rapid credit growth, especially credit booms, tend to end abruptly, typically in the form of financial crises. This paper presents the findings of a comprehensive event study focusing on sixty credit booms across emerging markets. The build-up of credit booms across emerging markets seems to be characterized by loose monetary policy stances, with domestic policy rates below trend during the prepeak phase of credit booms. While credit booms are associated with episodes of large capital inflows, international interest rates (a proxy for global liquidity) are virtually flat during these periods. Therefore, although external factors such as global liquidity conditions matter, and possibly increasingly so over time, domestic factors (especially monetary policy) also appear to be tightly associated with real credit growth across emerging markets.

Housing and the Financial Crisis

Abstract: Conventional wisdom held that housing prices couldn't fall But the spectacular boom and bust of the housing market during the first decade of the twenty-first century and millions of foreclosed homeowners have made it clear that housing is no different from any other asset in its ability to climb and crash Housing and the Financial Crisis looks at what happened to prices and construction both during and after the housing boom in different parts of the American housing market, accounting for why certain areas experienced less volatility than others It then examines the causes of the boom and bust, including the availability of credit, the perceived risk reduction due to the securitization of mortgages, and the increase in lending from foreign sources Finally, it examines a range of policies that might address some of the sources of recent instability

When and why worry about real exchange rate appreciation? the missing link between dutch disease and growth

Abstract: We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.

Wait-and-See: Investment Options under Policy Uncertainty

Abstract: This paper develops a model of investment decisions in which uncertainty about a one-time change in tax policy induces the firm to temporarily stop investing--to adopt a wait-and-see policy. After the uncertainty is resolved, the firm exploits the tabled projects, generating a temporary investment boom.

Africa’s Economic Boom. Why the Pessimists and the Optimists Are Both Right

Abstract: Sub-Saharan Africa’s GDP has grown five percent a year since 2000 and is expected to grow even faster in the future. Although pessimists are quick to point out that this growth has followed increases in commodities prices, the success of recent political reforms and the increased openness of African societies give the region a good chance of sustaining its boom for years to come.

Housing Booms, Manufacturing Decline, and Labor Market Outcomes

Abstract: We assess the extent to which manufacturing decline and housing booms contributed to changes in U.S. non-employment during the 2000s. Using a local labor market design, we estimate that manufacturing decline significantly increased non-employment during 2000-2007, while local housing booms decreased non-employment by roughly the same magnitude. The effects of manufacturing decline persist through 2011, but we find no persistent non-employment effects of local housing booms, most plausibly because housing booms were associated with subsequent busts of similar magnitude. We also find that housing booms significantly reduce the likelihood that displaced manufacturing workers remain non-employed, suggesting that housing booms "mask" non-employment growth that would have otherwise occurred earlier in the absence of the booms. Applying our estimates to the national labor market, we find that housing booms reduced non-employment growth by roughly 30 percent during 2000-2007 and that roughly 40 percent of the aggregate increase in non-employment during 2000-2011 can be attributed to manufacturing decline. Collectively, our results suggest that much of the non-employment growth during the 2000s can be attributed to manufacturing decline and these effects would have appeared in aggregate statistics earlier had it not been for the large, temporary increases in housing demand.

Numerical modeling of oil spill containment by boom using SPH

Abstract: The ocean environment is protected from oil pollution usually by using floating booms, which involves water-oil two-phase flow and strong fluid-structure interaction. In this paper, a modified multi-phase smoothed particle hydrodynamics (SPH) method is proposed to model oil spill containment by using a moving boom. Four major influencing factors including oil type, moving velocity and skirt angle of the boom, and water wave are investigated. The SPH simulation results demonstrate different typical boom failure modes found in laboratory experiments. It is shown that the ability of a boom in containing oil is not only affected by its own characteristics, but also closely related to external environmental factors. It is found that boom failure is more likely to happen for heavy oil, high boom velocity, negative skirt angle, and/or in the presence of water waves.