This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ̶ the delay between a discovery and production is on average 4 to 6 years. We first...

We provide evidence that institutions strongly influence where investors drill for oil and gas. At national borders, investors drill on the side with better institutionalquality two times out of three. To identify the effect of institutions, we utilise a global data set on the location of...

A rapidly rising carbon tax leads to faster extraction of fossil fuels and accelerates global warming. We analyze how general equilibrium effects operating through the international capital market affect this Green Paradox. In a two-region, two-period world with identical homothetic preferences...