This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the Version of Record. Please cite this article as doi: 10.1111/ecoj.12031
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Original Article
Saudi Arabia and the Oil Market†
DOI: 10.1111/ecoj.12031
© 2013 The Author(s). The Economic Journal © 2013 Royal Economic Society
Additional Information
- †
Anton Nakov thanks the European Central Bank for its hospitality during the .first drafts of this paper. The views expressed here are those of the authors and do not necessarily coincide with the views of the the Eurosystem or the Federal Reserve System. Corresponding author: Galo Nuño, European Central Bank, Kaisetrasse 29, 60311, Frankfurt am Main. E-mail: galo.nuno@ecb.europa.eu. We have bene.ted from comments and suggestions by Dirk Krueger, Lutz Kilian, Rafael Domenech, Alessia Campolmi, and conference participants at ESSIM, Computing in Economics and Finance, Dynare, and seminar participants at Milano-Bicocca, ECB and BBVA.
Publication History
- Accepted manuscript online: 7 MAR 2013 01:27PM EST
- Abstract
- Cited By
Abstract
In this paper we document two features that have made Saudi Arabia different from other oil producers. First, it has typically maintained ample spare capacity. Second, its production has been quite volatile even though it has witnessed few domestic shocks. These features can be rationalised in a general equilibrium model in which the oil market is modelled as a dominant producer with a competitive fringe. We show that the net welfare effect of oil tariffs on consumers is null. The reason is that Saudi Arabias's monopolistic rents fall entirely on fringe producers.
© 2013 The Author(s). The Economic Journal © 2013 Royal Economic Society