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This paper studies the impact of natural resource extraction in Latin America and the Caribbean (LAC) from a number of angles. First, we exploit a novel dataset on the universe of giant oil and gas discoveries in the region to trace out the cyclical response of macroeconomic variables to discoveries over the short- and medium-run. Second, we use non-stationary panel data techniques to look at the long-run (trend) relationship between GDP per capita and the value of oil and gas production—our results imply that the recent fall in prices could depress GDP per capita by several percentage points. Last, we use Bolivia, which discovered huge gas reserves in the late 1990s, as a case study to apply the cross-country results and to study the impact of discoveries at the subnational level.

Economic development --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Investments: Energy --- Labor --- Industries: Energy --- Natural Resource Extraction --- Natural Resources --- Economic Development: Agriculture --- Energy --- Environment --- Other Primary Products --- Economic Growth and Aggregate Productivity: General --- Economywide Country Studies: Latin America --- Caribbean --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Macroeconomics: Production --- Energy: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Industry Studies: Primary Products and Construction: General --- Environmental management --- Petroleum, oil & gas industries --- Investment & securities --- Labour --- income economics --- Extractive industries --- Natural resources --- Oil production --- Oil --- Mining sector --- Production --- Commodities --- Economic sectors --- Petroleum industry and trade --- Economic theory --- Mineral industries --- Bolivia --- Income economics

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We develop a bottom-up model of inflation in the euro area based on a set of augmented Phillips curves for seven sub-components of core inflation, and auxiliary regressions for non-core items. The disaggregated structure of the model improves on the forecasting performance of a standard one-equation Phillips curve, especially since the onset of the Covid-19 pandemic in early-2020 and the following energy shocks. We find a key role for international energy and food prices in explaining the recent surge in inflation – as of Q2 2022, they account for 75 percent of the increase in headline inflation and 30 percent of the increase in core. Economic slack and inflation expectations explain another 10 percent of headline and 20 percent of core inflation. Around one-third of the increase in core inflation remains unexplained by the model. Out of sample projections show high uncertainty around the inflation path while suggesting that inflation pressures are unlikely to dissipate quickly. We argue that the bottom-up approach offers a useful complement to the forecaster’s toolbox–especially in the current environment of sectoral shocks - by improving forecast accuracy, shedding additional light on the drivers of inflation, and providing a framework in which to apply ex-post judgement in a structured way.

Macroeconomics --- Economics: General --- Inflation --- Industries: Energy --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Energy: Demand and Supply --- Prices --- Hydrocarbon Resources --- Agriculture: Aggregate Supply and Demand Analysis --- Economic & financial crises & disasters --- Economics of specific sectors --- Petroleum, oil & gas industries --- Economic sectors --- Natural gas sector --- Fuel prices --- Oil prices --- Food prices --- Currency crises --- Informal sector --- Economics --- Gas industry --- China, People's Republic of

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We develop a bottom-up model of inflation in the euro area based on a set of augmented Phillips curves for seven sub-components of core inflation, and auxiliary regressions for non-core items. The disaggregated structure of the model improves on the forecasting performance of a standard one-equation Phillips curve, especially since the onset of the Covid-19 pandemic in early-2020 and the following energy shocks. We find a key role for international energy and food prices in explaining the recent surge in inflation – as of Q2 2022, they account for 75 percent of the increase in headline inflation and 30 percent of the increase in core. Economic slack and inflation expectations explain another 10 percent of headline and 20 percent of core inflation. Around one-third of the increase in core inflation remains unexplained by the model. Out of sample projections show high uncertainty around the inflation path while suggesting that inflation pressures are unlikely to dissipate quickly. We argue that the bottom-up approach offers a useful complement to the forecaster’s toolbox–especially in the current environment of sectoral shocks - by improving forecast accuracy, shedding additional light on the drivers of inflation, and providing a framework in which to apply ex-post judgement in a structured way.

China, People's Republic of --- Macroeconomics --- Economics: General --- Inflation --- Industries: Energy --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- State Space Models --- Energy: Demand and Supply --- Prices --- Hydrocarbon Resources --- Agriculture: Aggregate Supply and Demand Analysis --- Economic & financial crises & disasters --- Economics of specific sectors --- Petroleum, oil & gas industries --- Economic sectors --- Natural gas sector --- Fuel prices --- Oil prices --- Food prices --- Currency crises --- Informal sector --- Economics --- Gas industry

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This paper provides evidence of the causal impact of oil discoveries on development. Novel data on the drilling of 20,000 oil wells in Brazil allows us to exploit a quasi-experiment: Municipalities where oil was discovered constitute the treatment group, while municipalities with drilling but no discovery are the control group. The results show that oil discoveries significantly increase per capita GDP and urbanization. We find positive spillovers to non-oil sectors, specifically, an increase in services GDP which stems from higher output per worker. The results are consistent with greater local demand for non-tradable services driven by highly paid oil workers.

Petroleum --- Economic development --- Urbanization --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Coal-oil --- Crude oil --- Oil --- Caustobioliths --- Mineral oils --- Prospecting --- Investments: Energy --- Industries: Energy --- Industries: Manufacturing --- Industries: Service --- Natural Resources --- Economic Development: Agriculture --- Energy --- Environment --- Other Primary Products --- Economic Growth and Aggregate Productivity: General --- Energy: General --- Macroeconomics: Production --- Agricultural and Natural Resource Economics --- Environmental and Ecological Economics: General --- Industry Studies: Services: General --- Industry Studies: Manufacturing: General --- Investment & securities --- Petroleum, oil & gas industries --- Environmental management --- Manufacturing industries --- Oil production --- Natural resources --- Services sector --- Manufacturing --- Commodities --- Production --- Economic sectors --- Petroleum industry and trade --- Service industries --- Brazil

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We study inflation dynamics in Colombia using a bottom-up Phillips curve approach. This allows us to capture the different drivers of individual inflation components. We find that the Phillips curve is relatively flat in Colombia but steeper than recent estimates for the U.S. Supply side shocks play an important role for tradable and food prices, while indexation dynamics are important for non-tradable goods. We show that besides allowing for a more detailed understanding of inflation drivers, the bottom-up approach also improves on an aggregate Phillips curve in terms of forecasting ability. In the baseline forecast scenario, both headline and core inflation converge towards the Central Bank’s inflation target of 3 percent by end-2018 but these favorable inflation dynamics are vulnerable to large supply shocks.

Unemployment --- Inflation (Finance) and unemployment --- Stagflation --- Inflation (Finance) --- Stagnation (Economics) --- Effect of inflation on. --- Foreign Exchange --- Inflation --- Macroeconomics --- Forecasting --- Production and Operations Management --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Macroeconomics: Production --- Forecasting and Other Model Applications --- Currency --- Foreign exchange --- Economic Forecasting --- Output gap --- Exchange rates --- Consumer price indexes --- Economic forecasting --- Prices --- Production --- Economic theory --- Price indexes --- Colombia