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Journal Article
Drilling Productivity in the United States: What Lies Beneath
We construct new measures of drilling productivity and find that productivity increased sixfold from the mid-2000s to early 2017. Gains in below-ground efficiency?the number of barrels produced per foot of drilled wells?have largely driven this increase in overall productivity. The large oil price declines during the Great Recession and from 2014 to 2016 also played a role. However, further large increases in productivity are unlikely absent additional improvements in technology or a subsequent large downturn in oil prices.
Working Paper
Effects of State Taxation on Investment: Evidence from the Oil Industry
We provide theoretical and empirical evidence that firms do not in general respond equally to changes in prices and taxes in the setting of oil well drilling in the United States. Our key theoretical contribution is that in a multi-state model, a change in output price changes both the benefit and opportunity cost of drilling, whereas a change in a state tax rate only changes the benefit of drilling in that state. Thus, a firm responds more to a change in tax than a change in price. Our econometric results support this theoretical prediction. We find that a one dollar per barrel increase in ...
Working Paper
Death of Coal and Breath of Life: The Effect of Power Plant Closure on Local Air Quality
The number of U.S. coal-fired power plants declined by nearly 250 between 2001 and 2018. Given that burning coal generates large amounts of particulate matter, which is known to have adverse health effects, the closure of a coal-fired power plant should improve local air quality. Using spatial panel data from air quality monitor stations and coal-fired power plants, we estimate the relationship between plant closure and local air quality. We find that on average, the levels of particulate matter within 25 and 50 mile buffers around air quality monitors declined between 7 and 14 percent with ...
Working Paper
The Effect of the Conservation Reserve Program on Rural Economies: Deriving a Statistical Verdict from a Null Finding
This article suggests two methods for deriving a statistical verdict from a null finding,allowing economists to more confidently conclude when ?not significant" can in fact be interpreted as ?no substantive effect." The proposed methodology can be extended to a variety of empirical contexts where size and power matter. The example used to demonstrate the method is the Economic Research Service's 2004 Report to Congress that was charged with statistically identifying any unintended negative employment consequences of the Conservation Reserve Program (the Program). The report failed to ...
Journal Article
The cycles of wind power development
Wind power, with its recent dramatic pace of development, has the potential to alter the energy landscape in some areas of the United States. Before 2006, wind power development was sparse. However, installed capacity doubled by 2008 and accelerated rapidly through 2012. Although wind power still accounts for a small share of the nation?s electricity supply, the recent surge in development has sparked discussion about wind?s potential as a significant source of long-term renewable energy.
Working Paper
Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts
This paper investigates how consumers respond to local income shocks as a result of booms and busts in oil and gas development. Oil and gas development generates potentially large streams of income via wages and salaries to workers and royalty income to mineral rights owners. Changes in development may lead consumers to increase their spending depending on their exposure to income shocks. Using quarterly information on consumer debt and oil and gas activity, I ?nd that consumer debt increased at a peak of $840 per capita in counties with shale endowment and increased drilling. Each well ...
Journal Article
When the Music Stops: Slowing Wage Growth May Lead to More Delinquent Debt
Subprime auto debt has risen nearly 10 percent above pre-pandemic levels, and delinquency rates have increased despite high wage growth in the economy. Historically, high wage growth has been associated with lower transitions into delinquency. Should wage growth slow, delinquency rates would likely rise even higher, especially among subprime borrowers.
Working Paper
Rising Market Concentration and the Decline of Food Price Shock Pass-Through to Core Inflation
Using a vector autoregression that allows for time-varying parameters and stochastic volatility, we show that U.S. core inflation became 75 percent less responsive to shocks in food prices since the late 1970s. The decline in the pass-through of food price shocks to inflation is a result of a decline in both volatility and the persistence of food price changes in inflation. This decline in pass-through coincides with a period of increasing concentration in the food supply chain, especially among U.S. grocery retailers and distributors. We find that 60 percent of the variation in pass-through ...
Journal Article
Update on Kansas and Missouri economies
Journal Article
Production of natural gas from shale in local economies: a resource blessing or curse?
Innovations in the energy sector, particularly the extraction of natural gas from shale and tight gas formations using horizontal drilling and "fracking," have helped increase U.S. reserves of natural gas to an estimated 70 years' worth of supply. Some theories suggest such a boom leads to a local resource "blessing" in employment and a positive spillover into the local economy while others suggest a boom leads to a resource "curse" for industries not related to the energy sector. Brown examines county-level labor market conditions in the central United States and finds a modest ...