The price of energy and potential growth of developed countries : An attempt at quantification
Abstract A growth model based on a theoretical discussion of the impact of oil prices on developed countries is used to predict the impact of higher prices of energy on the growth of developed countries. The results suggest that the growth impact is small, that domestic price policies may have a large impact on oil imports, and that the investment of foreign assets accumulated by oil producers may make a significant contribution to the GNP of OECD.
Measures of Potential Output in Manufacturing for Eight Industrial Countries, 1955-78 (Estimation du potentiel de production relative au secteur manufacturier de huit pays industriels, 1955-78) (MediciÃ³n de la producciÃ³n manufacturera en potencia en ocho paÃ­ses industriales, 1955-78)
The concepts of potential output and output gap are in constant use in arguments about the economic situation and the appropriateness of public policies. Such concepts are, however, difficult to define and even more difficult to measure. The purpose of the present study is to review these concepts and to estimate consistent series of potential output in manufacturing for Canada, the United States, Japan, France, the Federal Republic of Germany, Italy, the United Kingdom, and Sweden for the period 1955-75. Potential output series are also projected for the medium term (1976-78) on the basis of forecasts of available resources. The production function method is selected as the best approach to derive potential output series. The function used here is a modified Cobb-Douglas function that allows for economies of scale and cyclical variations in the intensity of use of employed labor and of the capital stock. The estimation also makes use of pooled time-series cross-sectional techniques. At the cost of imposing certain constraints on the parameters, these techniques allow a large number of variables to be taken into account, such as the evolution of the mean age of the capital stock, the increase in the price of energy, and other factors specific to certain countries. The study concludes that the rate of growth of potential output in manufacturing is now lower in most industrial countries than it was in the late 1960s. However, the fall is not as large as is often claimed, so that the output gaps early in 1976 were extremely high in all the major industrial countries. The principal reasons for the slowdown in the rate of growth of potential output are the lower rate of capital accumulation and the reduction of the normal workweek, rather than the direct effect of the increase in the price of energy. In Japan and the United States, the trend of "technical progress" seems also to have decreased, possibly because a larger part new investment is devoted to pollution control. /// Les notions de potentiel de production et d'A©cart de production apparaissent constamment au cours des discussions concernant la situation A©conomique et le bien-fondA© des politiques officielles. Elles sont cependant difficiles A dA©finir et encore plus difficiles A quantifier. L'objet de la prA©sente A©tude est d'examiner ces concepts et d'estimer, pour la pA©riode 1955-75, des sA©ries comparables se rapportant au potentiel de production du secteur manufacturier au Canada, aux Etats-Unis, au Japon, en France, en RA©publique fA©dA©rale d'Allemagne, en Italie, Au Royaume-Uni et en SuA¨de. On a aussi projetA© des sA©ries pour le potentiel de production A moyen terme (1976-78) d'aprA¨s les prA©visions concernant les ressources disponibles. La mA©thode de la fonction de production a A©tA© retenue car elle constitue le meilleur moyen de dA©river des sA©ries relatives au potentiel de production. La fonction utilisA©e ici est une fonction Cobb-Douglas modifiA©e qui tient compte des A©conomies d'A©chelle et des variations conjoncturelles affectant le degrA© d'utilisation de la population active et du stock de capital. En outre, cette estimation utilise simultanA©ment des sA©ries chronologiques raccordA©es relatives aux diffA©rents pays. MAame si elles imposent certaines contraintes aux paramA¨tres, ces techniques permettent de prendre en compte un grand nombre de variables, telles que l'A©volution de l'A¢ge moyen du stock de capital, l'enchA©rissement de l'A©nergie et d'autres facteurs particuliers A certains pays. La conclusion A laquelle aboutit cette A©tude est que dans le secteur manufacturier de la plupart des pays industriels, le taux de croissance du potentiel de production est aujourd'hui infA©rieur A celui de la fin des annA©es 60. Toutefois, le ralentissement n'est pas aussi important qu'on le prA©tend souvent et les A©carts de production au dA©but de 1976 A©taient extrAamement larges dans tous les grands pays industriels. Si le rythme de croissance du potentiel de production a ralenti, c'est surtout en raison de la baisse du taux d'accumulation du capital et de la rA©duction de la semaine de travail normale, plutA´t que de l'effet direct de l'enchA©rissement de l'A©nergie. Au Japon et aux Etats-Unis, le taux tendanciel du "progrA¨s technique" semble aussi avoir baissA©, peut-Aatre parce qu'une fraction plus importante des nouveaux investissements est consacrA©e au contrA´le de la pollution. /// Los conceptos de producciA³n en potencia y vacA­o de la producciA³n aparecen constantemente en los argumentos en torno a la situaciA³n econA³mica y a lo apropiado de la polA­tica estatal. Sin embargo, dichos conceptos resultan aquA­ difA­ciles de definir y aun mAis difA­ciles de medir. La finalidad del presente estudio es examinar dichos conceptos y estimar series coherentes de la producciA³n manufacturera en potencia para CanadAi, Estados Unidos, JapA³n, Francia, Italia, Reino Unido, RepAoblica Federal de Alemania y Suecia durante el perA­odo 1955-75. Se hace tambiA©n una proyecciA³n de las series de producciA³n en potencia para el plazo medio (1976-78) a base de pronA³sticos de los recursos disponibles. Se ha seleccionado el mA©todo de la funciA³n de producciA³n como el mejor sistema para obtener las series de producciA³n en potencia. La funciA³n aquA­ utilizada es la funciA³n Cobb-Douglas modificada, que permite la incorporaciA³n de las economA­as de escala y las variaciones cA­clicas en la intensidad de utilizaciA³n de la mano de obra empleada y de la masa de capital. La estimaciA³n utiliza tambiA©n las tA©cnicas de series cronolA³gicas combinadas de secciA³n representativa. Estas tA©cnicas, al costo de imponer ciertas limitaciones a los parAimetros, permiten que se tengan en cuenta un gran nAomero de variables tales como la evoluciA³n de la edad media de la masa de capital, la subida del precio de la energA­a, y otros factores especA­ficos en determinados paA­ses. Se llega a la conclusiA³n de que la tasa de crecimiento de la producciA³n manufacturera en potencia es ahora inferior en la mayorA­a de los paA­ses industriales de lo que era a finales de la dA©cada de 1960. Ahora bien, esta disminuciA³n no es tan grande como se ha dicho a veces, de forma que el vacA­o de la producciA³n de comienzos de 1976 fue amplA­simo en todos los principales paA­ses industriales. Las razones mAis importantes del aminoramiento de la tasa de crecimiento de la producciA³n en potencia son la tasa inferior de acumulaciA³n de capital y la reducciA³n de la semana normal de trabajo, no el efecto directo de la subida en el precio de la energA­a. En JapA³n y Estados Unidos parece haber disminuido tambiA©n el ritmo de tendencia del "progreso tA©cnico", posiblemente porque se estA© dedicando al control de la poluciA³n una mayor parte de la nueva inversiA³n.
Developing countries and non-fuel minerals
Trends in the world market place for nine major minerals, iron ore, bauxite, copper, manganese ore, lead, nickel, phosphate rock, zinc, and tin are discussed. Demand for bauxite, nickel, and phosphate rock is anticipated to increase faster than economic activity generally. Demand for iron ore, manganese ore, copper, and zinc will expand at rates of 4 to 4.5 percent per year. Lead and tin are estimated to increase at rates of 3.0 and 1.2 percent respectively. World reserves are ample for phosphate rock, iron ore, bauxite, nickel, and manganese ore; proven reserves for copper, lead, and zinc are expected to last 30 years or less; tin reserves are very low. Prices in the United States in 1973 have been very high due to currency adjustments, sharp upturns in industrial activity, and serious supply problems. Analysis of economic forces suggests that prices will drop in the following years. Developing countries' exports of these nine minerals are likely to increase from $4.8 billion in 1967-69 to $15.2 billion in 1980. Stockpiles, recycling possibilities, and substitution mitigate against the likelihood of an OPEC type cartel among mineral suppliers.