Abstract:We develop a structural model of the global market for crude oil that for the first time explicitly allows for shocks to the speculative demand for oil as well as shocks to the flow demand and flow supply. The forward-looking element of the real price of oil is identified with the help of data on oil inventories. The model estimates rule out explanations of the 2003-08 oil price surge based on unexpectedly diminishing oil supplies and based on speculative trading. Instead, we find that this surge was caused by fluctuations in the flow demand for oil driven by the global business cycle. There is evidence, however, that speculative demand shifts played an important role during earlier oil price shock episodes including 1979, 1986, and 1990. We also show that, even after accounting for the role of inventories in smoothing oil consumption, our estimate of the short-run price elasticity of oil demand is much higher than traditional estimates from dynamic models that do not account for price endogeneity. We conclude that additional regulation of oil markets would not have prevented the 2003-08 oil price surge.

Sign restrictions on the responses generated by structural vector autoregressive models have been proposed as an alternative approach to the use of exclusion restrictions on the impact multiplier matrix. In recent years such models have been increasingly used to identify demand and supply shocks in the market for crude oil. We demonstrate that sign restrictions alone are insufficient to infer the responses of the real price of oil to such shocks. Moreover, the conventional assumption that all admissible models are equally likely is routinely violated in oil market models, calling into question the use of posterior median responses to characterize the responses to structural shocks. When combining sign restrictions with additional empirically plausible bounds on the magnitude of the short‐run oil supply elasticity and on the impact response of real activity, however, it is possible to reduce the set of admissible model solutions to a small number of qualitatively similar estimates. The resulting model estimates are broadly consistent with earlier results regarding the relative importance of demand and supply shocks for the real price of oil based on structural vector autoregressive (VAR) models identified by exclusion restrictions, but imply very different dynamics from the posterior median responses in VAR models based on sign restrictions only.

Psoriasis is a common papulosquamous skin disease. The histopathology is characterized by epidermal hyperplasia and inflammation. Recent studies suggest that keratinocyte proliferation and inflammation in psoriasis are manifestations of the same underlying pathological process.

Atmospheric carbon dioxide concentrations and climate are regulated on geological timescales by the balance between carbon input from volcanic and metamorphic outgassing and its removal by weathering feedbacks; these feedbacks involve the erosion of silicate rocks and organic-carbon-bearing rocks. The integrated effect of these processes is reflected in the calcium carbonate compensation depth, which is the oceanic depth at which calcium carbonate is dissolved. Here we present a carbonate accumulation record that covers the past 53 million years from a depth transect in the equatorial Pacific Ocean. The carbonate compensation depth tracks long-term ocean cooling, deepening from 3.0-3.5 kilometres during the early Cenozoic (approximately 55 million years ago) to 4.6 kilometres at present, consistent with an overall Cenozoic increase in weathering. We find large superimposed fluctuations in carbonate compensation depth during the middle and late Eocene. Using Earth system models, we identify changes in weathering and the mode of organic-carbon delivery as two key processes to explain these large-scale Eocene fluctuations of the carbonate compensation depth.