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

Arezki, Rabah, 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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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.
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions
JEL classification:	L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L71 - Mining, Extraction, and Refining: Hydrocarbon Fuels N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N52 - U.S.; Canada: 1913- O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q33 - Resource Booms R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
Date Deposited:	03 Apr 2017 09:18
Last Modified:	10 Oct 2024 20:15
URI:	http://eprints.lse.ac.uk/id/eprint/72022

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