Date of Award

5-2012

Document type

dissertation

Access Type

Open Access Dissertation

Degree Name

Doctor of Philosophy (PhD)

Degree Program

Economics

First Advisor

James K. Boyce

Second Advisor

Michael Ash

Third Advisor

Erin Baker

Subject Categories

Economics

Abstract

This dissertation is composed of three essays. In the first essay, I construct a supply and demand model for crude oil markets. I then fit the model to historical price and quantity data to be able to project future oil prices. Ex-post forecasts using this model predict historical price trends more accurately than most oil forecasting models. The second essay incorporates the supply and demand model from the previous paper into a complex systems model that also includes oil futures markets. Adaptive-agent investors in futures markets choose from a set of rules for predicting future prices that includes the rational expectations equilibrium rule, as well as rules that rely on more short-term information. The set of available rules evolves following a genetic algorithm; agents choose which rules to follow based on their past performance. While outcomes vary depending on the specific assumptions made, under a plausible set of assumptions investors can fail to anticipate shortages properly, leading to significant price spikes that would not occur in the rational expectations equilibrium. The last essay addresses the impacts of carbon cap-and-trade policies on consumers. I calculate how higher carbon prices would affect the prices of different consumer goods, how consumers would respond to the price changes, and how the price changes, along with revenue recycling, would impact consumers of different income levels.

DOI

https://doi.org/10.7275/3297553

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