A Model of Energy, International Trade and Capital Flows

Abstract

This paper reports on the formulation and solution of 3RT, a three-region, international equilibrium model of energy, international trade and capital flows. The three regions are defined as: (1) OECD, (2) OPEC and (3) NODC (non-OPEC developing countries). The NUDC region is the one whose growth is most likely to be affected by capital flows and by changes in the international terms of trade. This could have a major impact upon the future price of oil, for there are wide margins of uncertainty over future rates of NUDC energy consumption, production and oil imports (or exports). A fixed-point method of solution is employed.