Resource booms and the macroeconomy: The case of U.S. shale oil

Abstract

We examine the implications of the U.S. shale oil boom for the U.S. economy, trade balances, and the global oil market. Using comprehensive data on different types of crude oil, and a two-country general equilibrium model with heterogeneous oil and refined products, we show that the shale boom boosted U.S. real GDP by a little more than 1 percent and improved the oil trade balance as a share of GDP by about 1 percentage point from 2010 to 2015. The boom led to a decline in oil and fuel prices, and a dramatic fall in U.S. light oil imports. In addition, we find that the crude oil export ban, a policy in effect until the end of 2015, was a binding constraint, and would likely have remained a binding constraint thereafter had the policy not been removed.