This paper examines the e ects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, re ned oil products, and a non-oil good. The model in-
corporates di erent types of crude oil that are imperfect substitutes for each other as inputs into the re ning sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW).
We investigate the implications of a signicant
increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. re ners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the
re ning sector. Light oil prices become arti cially low in the U.S., and U.S. re neries produce ineciently high amount of re ned products, but the impact on re ned product prices and GDP are negligible.