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

Arezki, Rabah and Fetzer, Thiemo and Pisch, Frank (2017) On the comparative advantage of U.S. manufacturing: evidence from the shale gas revolution. Journal of International Economics, 107. pp. 34-59. ISSN 0022-1996

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Identification Number: 10.1016/j.jinteco.2017.03.002

Abstract

This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on United States manufacturing production and trade. The shale gas revolution has led to (very) large and persistent differences in the price of natural gas between the United States 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 percent 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.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/00221...
Additional Information: © 2017 Elsevier B.V.
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 03 Apr 2017 09:18
Last Modified: 11 Aug 2017 10:47
URI: http://eprints.lse.ac.uk/id/eprint/72022

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