Abstract:Oil discoveries affect global well-being through multiple channels. Focusing on the change in pollution, consumption and extraction cost paths, we build a multi-period model with (endogenous) oil phase out that allows us to assess whether oil windfalls may be welfare-enhancing. The assessment depends on the quality of the discovered resource, expressed as the extraction cost. Our findings suggest that even when faced with high environmental externalities and no internalization mechanism for them, new oil finds… Show more
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