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THE International Monetary Fund Thread (merged)

Discussions about the economic and financial ramifications of hydrocarbon depletion.

Re: IMF gives US 5 year plan: debt ceiling, VAT & carbon tax

Unread postby Pretorian » Fri 01 Jul 2011, 16:56:40

pup55 wrote:Why in the hell do we have a 6 billion dollar per year naval base 1200 miles from the nearest ocean? Why are we defending Germany and Japan and Korea, and of course Israel, while their middle classes have government-financed health care, and a higher standard of living than we do?


What one thing got to do with another? You can't afford healthcare because your doctors are demi-gods, with a few actual gods, and they want or need to be paid accordingly. They also want you to insure them, so if they fornicate you up they won't go to prison.
In the rest of the world doctors are human beings just like high-school teachers or engineers. They live in apartments and ride Volkswaggens, or even a lowly public transportation. They sometimes do go to prisons when they fornicate you up.
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Re: IMF gives US 5 year plan: debt ceiling, VAT & carbon tax

Unread postby Lore » Fri 01 Jul 2011, 17:08:39

Pretorian wrote:
pup55 wrote:Why in the hell do we have a 6 billion dollar per year naval base 1200 miles from the nearest ocean? Why are we defending Germany and Japan and Korea, and of course Israel, while their middle classes have government-financed health care, and a higher standard of living than we do?


What one thing got to do with another? You can't afford healthcare because your doctors are demi-gods, with a few actual gods, and they want or need to be paid accordingly. They also want you to insure them, so if they fornicate you up they won't go to prison.
In the rest of the world doctors are human beings just like high-school teachers or engineers. They live in apartments and ride Volkswaggens, or even a lowly public transportation. They sometimes do go to prisons when they fornicate you up.


This is true, in France doctors earn a rather mediocre professional wage. Does that make them less then capable? I would suggest probably not in the scheme of things. A profession should be in most ways a calling, whether it's being a computer programmer, a nurse, or a waiter.
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Re: IMF gives US 5 year plan: debt ceiling, VAT & carbon tax

Unread postby Pretorian » Fri 01 Jul 2011, 22:09:57

Lore wrote:
Pretorian wrote:
pup55 wrote:Why in the hell do we have a 6 billion dollar per year naval base 1200 miles from the nearest ocean? Why are we defending Germany and Japan and Korea, and of course Israel, while their middle classes have government-financed health care, and a higher standard of living than we do?


What one thing got to do with another? You can't afford healthcare because your doctors are demi-gods, with a few actual gods, and they want or need to be paid accordingly. They also want you to insure them, so if they fornicate you up they won't go to prison.
In the rest of the world doctors are human beings just like high-school teachers or engineers. They live in apartments and ride Volkswaggens, or even a lowly public transportation. They sometimes do go to prisons when they fornicate you up.


This is true, in France doctors earn a rather mediocre professional wage. Does that make them less then capable? I would suggest probably not in the scheme of things. A profession should be in most ways a calling, whether it's being a computer programmer, a nurse, or a waiter.


Well then do not blame the military for your healthcare ruin, better ask AMA why medical schools can't increase their output without permission , why new schools cannot be opened without their permission, why a college degree is needed to enter a med school and why foreign doctors with 20-30 years of impeccable record cannot work in USA. After all who is this AMA , it is a private corporation and nothing else.
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Re: THE International Monetary Fund Thread (merged)

Unread postby smiley » Mon 05 Dec 2011, 16:09:06

pup55 wrote:9. Institute a national sales tax, or value-added-tax (VAT) Sadly this is inevitable. It allows taxation without representation.


Pops wrote:A VAT in the US with no other changes will perpetuate or maybe accelerate the current trickle-up of wealth and I'm very worried about that as we go to the next phase.


sixtrings wrote:but also pass a NATIONAL SALES TAX,


I'm quite surprised about the strong reactions against VAT. Maybe I'm just brainwashed, since we already have a VAT system for over 50 years.

But if I'm not mistaken this site is adressing the problem of consumption, be it of one specific resource.

How can then a taxation sceme which targets just that, consumption, and uses the receipts for the common good, suddenly become the source of all evil?
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Mon 05 Dec 2011, 16:51:59

smiley wrote:I'm quite surprised about the strong reactions against VAT. Maybe I'm just brainwashed, since we already have a VAT system for over 50 years.

But if I'm not mistaken this site is adressing the problem of consumption, be it of one specific resource.

How can then a taxation sceme which targets just that, consumption, and uses the receipts for the common good, suddenly become the source of all evil?
Not the source of all evil, but VAT taxes are regressive, meaning they hurt the poor more than the rich. Over here in the States, the wealth inequality is much worse than it is in Europe. We don't have nice healthcare and pension systems over here. The poor are getting shafted enough as it is, no need to throw a regressive tax on top of it. Maybe once we address the massive wealth inequality in this country, we can address adding in some consumption taxes. Until then, I am not in favor of a taxation system that will further inequality.

List of countries by income equality

One of the 'Canons of taxation' developed by Adam Smith said that a tax should be linked to 'ability to pay'. VAT does not tie in with this because the amount of VAT on a particular good will be the same for everyone, however much they earn. This means that VAT is regressive. In other words, the more people earn the less the proportion of their income they pay in tax. Regressive taxes will hit less-well-off people harder than the better-off.
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Re: THE International Monetary Fund Thread (merged)

Unread postby AgentR11 » Mon 05 Dec 2011, 18:17:39

A VAT most certainly does reflect ability to pay. You no can buy because item is too expensive? You no have to pay tax.
Tada.

Seriously. Exclude basic staples, just as we generally do for sales tax now; and its perfectly reasonable. Those who consume, pay; those who save or don't earn enough to consume, don't have to pay.
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Mon 05 Dec 2011, 18:28:30

Even with staples excluded, the VAT is still regressive.

The poorest 20% of UK households spend a higher proportion of their disposable income on VAT than the richest 20%, the Office for National Statistics said. It said that the poorest fifth spent 9.8% of their disposable income on goods attracting VAT in 2009/10, while the richest fifth spent 5.3%

It is sometimes argued that the poorest households are not hit as hard by rises in VAT, because the tax is not charged on essential items such as food and non-alcoholic drinks.

"This latest piece of research reinforces what is widely perceived to be the fundamental inequality at the heart of VAT: the poorer pay more of it relative to their incomes than the wealthy," said David Breger of HW Fisher & Company chartered accountants. "It's clear that the Government needs to reconsider the full effect of VAT, which is inherently regressive."
Poorest spend higher proportion on VAT than richest
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Re: THE International Monetary Fund Thread (merged)

Unread postby AgentR11 » Mon 05 Dec 2011, 18:40:08

kublikhan wrote:Even with staples excluded, the VAT is still regressive.


I didn't say it wasn't regressive; I said that it does reasonably reflect ability to pay.

Its regressive because people in lower and middle class situations spend their income. People in upper income ranges generally don't spend most of their income; and a good number don't even draw the income that they easily could, as they set their own salaries and bonuses. So even if they control the power of tens of millions of dollars every year, they may only draw a million or so as income, and of that, may only spend a couple hundred grand on tax bearing items. So their percentage is low, but so is their percentage consumption.
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Mon 05 Dec 2011, 19:02:13

I didn't say it wasn't regressive; I said that it does reasonably reflect ability to pay.

Its regressive because people in lower and middle class situations spend their income. People in upper income ranges generally don't spend most of their income; and a good number don't even draw the income that they easily could, as they set their own salaries and bonuses. So even if they control the power of tens of millions of dollars every year, they may only draw a million or so as income, and of that, may only spend a couple hundred grand on tax bearing items. So their percentage is low, but so is their percentage consumption.
And that is exactly why the VAT is a bad idea if your goal is to collect revenue and promote equality. Those with the deepest pockets are taxed the lowest. Those with the most ability to pay, are taxed the least. This is not a good basis for a tax policy.
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Re: THE International Monetary Fund Thread (merged)

Unread postby AgentR11 » Mon 05 Dec 2011, 19:08:00

But I have zilch interest in using government to create equality of outcome. ZERO. And will oppose it at any and every opportunity.
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Mon 05 Dec 2011, 19:33:35

AgentR11 wrote:But I have zilch interest in using government to create equality of outcome. ZERO. And will oppose it at any and every opportunity.
In this country, we do not even have a level playing field and equal opportunities for everyone to succeed. Forget equalizing outcomes, how about just giving people the same opportunities for success? Instead, the government is being used to promote policies that benefit the rich and those that have already succeeded. They are using government policies to drive more and more of this county's wealth into the hands of the top 1%, and denying opportunities to those who need it most. By promoting a VAT, you are not standing up for some noble ideal of an equal playing field for all. You are simply adding fuel to the fire of using government to drive more wealth into the hands of those who already have it while taxing those who can least afford it, increasing inequality. Inequality is not just bad for a country on moral grounds, it is bad on economic grounds as well.

Recent IMF research has shown that countries tend to grow faster and more consistently when income distribution is more equitable, so the Fund is now paying much more attention to these issues in its programs, she said.
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Re: THE International Monetary Fund Thread (merged)

Unread postby AgentR11 » Mon 05 Dec 2011, 20:16:03

kublikhan wrote:By promoting a VAT, you are not standing up for some noble ideal of an equal playing field for all. You are simply adding fuel to the fire of using government to drive more wealth into the hands of those who already have it while taxing those who can least


I am interested in taxation following consumption. Right now, taxes follow income, which artificially increases consumption. As tax law is right now, if I buy a $400 monitor for commercial use, it doesn't cost me $400; it costs less because I deduct it via depreciation/179 expense/whatever. This increases consumption, it does not reduce it. We need consumption reduced in order to fit our economy into this gradually decreasing available resource space. VAT allows the impacts of a consumptive act on society to be paid for by the consumptive act. Live lightly, gently, efficiently, you will pay less in tax. Live large, consuming everything in your path, you'll pay a ton in tax.
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Mon 05 Dec 2011, 20:44:19

I considered supporting a national consumption tax for that same reason, to curtail reckless consumption. After all, you can counteract some of the regressive features of the tax by playing with the rates on the national income tax. However I don't trust our politicians to do this. Our congress either gets gridlocked when it comes to issues of raising taxes, or sends out a "compromise bill" that ends up raping the poor and working man.

Further, the consumer spending bubble has already burst. Consumer spending is far lower today that it would be if the high flying days of the previous decade had continued. I don't think it is a good idea to hog tie consumer spending further by introducing a national consumption tax. Later, when(if) the economy starts growing again, perhaps that would be a better time to do it. For now, the recession has already reigned in our reckless consumer spending and looks to continue doing so for the foreseeable future.

According to Lansing, average per-person spending was $7,356 less (in inflation-adjusted dollars) than if our pre-recession spending spree had continued apace. That works out to $175 less per month that we've each been circulating back into the economy. Which goes a long way to explain why the economy isn't exactly humming these days.

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Nor is anyone suggesting that it would in fact be a good thing if we could just hit the rewind button and get back to our pre-recession spending levels. The problem is not so much our current spending rate but that our spending was on steroids from 2000-2007 courtesy of inflated housing values.
"People are wondering why consumer spending is so slow these days. What they should be asking is: Why was it so strong in previous years? You're comparing it to an artificial economy that was driven by debt. We're not going back to that kind of spending growth unless we have a big run-up in housing prices again, or a change in labor markets that makes people's income go up."

Our economy faces a far longer rehab than ARod's expected six weeks on the disabled list; it takes time to recover from debilitating and outsize bubbles. And the consumer spending bubble was both. Look no further than the shadow inventory of distressed and foreclosed homes. Until those work their way through the market, home prices will remain under pressure. That will keep household net worth down, and until we all see an uptick in that telling stat, we're not going to be in much of a mood -- or shape -- to increase our spending (albeit at a healthy non-bubble pace). Moreover, the recovery could be even further impeded if we end up with a milquetoast debt/deficit deal that is devoid of any clear initiatives to spur job growth. There are still 14.1 million unemployed Americans in no position to spend.
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Re: THE International Monetary Fund Thread (merged)

Unread postby smiley » Tue 06 Dec 2011, 18:22:09

kublikhan wrote:By promoting a VAT, you are not standing up for some noble ideal of an equal playing field for all.


There are 196 countries in the world. 93 of those have a VAT taxing sceme. I think that when you compare your Gini indexes you will find little evidence of a causal connection between VAT and inequality. It may not help to level inequality, but it is not causing or strongly promoting it. Therefore I would see little harm in introducing it.

But I think when you look at who benefits most from an absence of VAT, you will find that it is actually the producers. With VAT they have a choice, either maintain current margins and accept lower consumption, or lower the margins to maintain consumption. Either way it means less profits and therefore smaller gifts to the CEO's wife for Christmas.

I can imagine that the strongest opposition against VAT is actually coming from the industrials. And they probably are working the "VAT is bad for you" angle pretty hard, because they are smart enough to realize that the argument that they might have to trade in their Maybach for an ordinary Roller, won't win them much empathy.

I always become suspicious when politicians make the headlines telling that something is bad for you. Because generally the don't give your wellbeing much consideration, so it is usually someone else's interests which are about to get hurt. :)

kublikhan wrote:However I don't trust our politicians to do this.

That's a valid argument and it is certainly not restricted to your government only.
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Re: THE International Monetary Fund Thread (merged)

Unread postby kublikhan » Tue 06 Dec 2011, 20:12:40

smiley wrote:There are 196 countries in the world. 93 of those have a VAT taxing sceme. I think that when you compare your Gini indexes you will find little evidence of a causal connection between VAT and inequality.
Of course not. There is a whole slew of factors that influence inequality. There are ways you can counteract the regressive features of the VAT. Ex: increase the progressiveness of the income tax. If I remember correctly, some European countries took this approach when implementing the VAT.

smiley wrote:But I think when you look at who benefits most from an absence of VAT, you will find that it is actually the producers. With VAT they have a choice, either maintain current margins and accept lower consumption, or lower the margins to maintain consumption. Either way it means less profits and therefore smaller gifts to the CEO's wife for Christmas.

I can imagine that the strongest opposition against VAT is actually coming from the industrials. And they probably are working the "VAT is bad for you" angle pretty hard, because they are smart enough to realize that the argument that they might have to trade in their Maybach for an ordinary Roller, won't win them much empathy.
I looked, but the facts did not support your conclusion. In fact, not only did most producers pass along the entire VAT increase to customers, but many went overboard and increased prices above and beyond the VAT increase, then turned around and blamed it on the VAT.

From 4 January 2011, the standard rate of VAT in the UK will be 20%, raising an extra £13 billion over a year. The Centre for Retail Research estimated that this VAT increase would be passed on in full to the public as increased prices.

98% of retailers would ultimately pass on the whole of the VAT increase to customers. Sales Impact. 73.3% expected that the VAT rise would cut sales and most would slim down their labour force. Stores and Staff. We expect 9,480 stores to be closed as a result of the VAT rise in the 2011 and a further 5,000 in 2012. 47,000 staff or 1.6% of the labour force would go.
VAT HIKE TO 20%: Effects on Retailers and Consumers

Labour leader Ed Miliband accused Mr Osborne of ‘treating people like fools’ for claiming the VAT increase, which he says will cost every family £359 a year, would hit the poor less hard than the rich. Labour pointed out that in 2009, David Cameron attacked VAT as ‘very regressive’, adding: ‘It hits the poorest the hardest. It does, I absolutely promise you.’ Mr Miliband said: ‘George Osborne should stop treating people like fools. He claims that VAT is fair but David Cameron has admitted it is unfair. He should come out and apologise for misleading the British people.’

Mrs Brown said: ‘I’m not happy. I didn’t notice that and I forgot that the VAT went up today. I don’t think it’s right to put VAT up. We need all the help we can get, not extra cost.’ Experts claim that businesses will increase the cost of goods by up to three times more than the tax rise – then blame it on VAT. A report by KPMG found almost 60 per cent of retailers intended to put up their prices by more than the 2.5 per cent increase. Instead, many shops, restaurants, gyms and mobile phone companies will implement increases of between five and eight per cent.
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Re: THE International Monetary Fund Thread (merged)

Unread postby radon » Tue 06 Dec 2011, 21:31:50

Strictly speaking, the actual effective VAT burden depends not as much on your level of income but on your level of VATable consumption compared to your savings. If you are "affluent", but your savings are negative, i.e. you finance your consumption by credit, than the effective VAT rate that you pay may be much higher than that of a poor person that hardly makes ends meet but borrows nothing. This is because you pay VAT both on your income and borrowings that you spend consuming stuff.

Historically, however, rich people tended to save or invest (in VAT exempt financial and other assets) a lot, while poor could hardly afford any savings. This made the regressiveness argument hold true, in general.

Note that the absolute amount of VAT that a rich person would normally contribute would be much higher than that of the poor person, regardless of the level of savings. One of the advantages of the indirect taxes like VAT is that they are more difficult to circumvent compared to income taxes. This is because they are remitted to the tax office (IRS) by the agent (producer), rather than the tax payer (rich or poor person), and because of the producer's perception that the tax is at least partially borne by the consumer. Actual levels of tax lost to avoidance/evasion tend to be much lower for VAT than for the income taxes.

Yet, VAT has serious disadvantages. It may kill certain businesses, especially small ones. Russia at some point introduced a "small business" company tax regime, whereby companies earning below certain threshold (currently circa $2m p.a.) are exempt from VAT and other taxes and pay a 6% turnover or 15% profits tax instead. This regime is now very popular, and companies, as they grow, do fear that they may exceed the $2m threshold because for them this could mean death from the VAT strike.

By the way, one important reason the VAT was proposed by the French academics was that they tried to get rid of turnover taxes as the latter were viewed as leading to monopolization due to their self-multiplication effect at all stages of the production chain. But in practice it often works not as intended - there is a bunch of various exempt entities like banks and other FS institutions, that distort that anti-turnover argument.

Another thing about VAT is that it is complex, time-consuming and difficult to administer, real headache actually. Sales tax is much easier to administer and its administration is much cheaper on the economy-wide scale.

In general, the producers are not always able to pass the VAT cost on to the consumer. The fact that they were able to do this in Britain evidences that there could be some hidden inflation pressure and that the VAT hike affected all producers simultaneously. The ensuing price hike, seemingly, concerned primarily products whose price elasticity is low, like basic foodstuff. For these products it is especially easy to pass the VAT cost to the consumer.

In order to counter that, and to counter the general regressiveness of VAT, basic vital supplies (and services), like select foodstuff items and medical supplies (medical services), are often taxed at reduced rates or altogether exempt. This kind of exempts the poor from VAT, and makes more difficult to pass the VAT costs on to the consumers, as the consumers have a choice of altering their consumption patterns towards VAT-reduced-rate/exempt items.
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Re: THE International Monetary Fund Thread (merged)

Unread postby careinke » Wed 07 Dec 2011, 03:42:52

The "fair Tax" is a sales tax that replaces all Income, payroll, and corporate taxes. It is not regressive as it gives a "pre-bate" to everyone for the amount of taxes paid up to the poverty level. Therefore, this is the ONLY proposed taxing scheme that completely un-taxes the poor.

The sales tax is on all NEW services and goods. It pays the sellers a percentage to collect the taxes. Used goods are not taxed giving another advantage to the lower class while encouraging recycling.

Of course the Dems are, for the most part, against it because it takes away their ability to conduct class warfare.
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Re: THE International Monetary Fund Thread (merged)

Unread postby Claudine47 » Fri 30 Dec 2011, 00:18:35

let me share something more obout IMF, The annual official meetings opening was preceded by nearly a week of parallel programmes of topical seminars, conferences, panel and roundtable discussions, interactions of civil society, academics, media and youth groups with IMF Managing Director (Christine Lagarde) and World Bank President (Robert Zoellick). It was not possible to participate in every seminar or roundtable discussion but attended mostly those of interest to me and my home country. Some of the meetings I had been to included meeting up with IMF’s mission chief in South Sudan and his team where we were able to exchange views on issues that are of concern to me. Beside academic papers and expert talks, policy makers such as central bank managers of member countries, finance ministers, industry leaders, and civil society leaders presented ’on the ground’ perspective that enriched the discussions that followed the presentations.

Topics covered in various roundtable and panel discussions, seminars, and conferences included fostering the Fund’s effective engagement with fragile states, challenges of commodity price volatility and inclusive growth in low-income countries, achieving inclusive growth in low-income countries, BBC World debate on current state of global economy, youth dialogue on job creation, IMF’s technical assistance in crisis situations and building institutions for the future, and many more.

Friday 23rd was the main opening day which brought everyone together after days of intense interactions in roundtable and thematic panel discussions, conferences, and seminars.

The main speakers at the opening day were the IMF Managing Directors and World Bank President. This article is an attempt to share my impressions and experiences at the annual meetings.

IMF in Few Lines! For my non-economist readers, a brief introduction to International Monetary Fund is appropriate. However, for those well versed in economics, they may like to skip this paragraph or check my facts!
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IMF releases new research paper concerning oil and economy

Unread postby Graeme » Thu 10 May 2012, 10:05:05

IMF releases new research paper concerning oil and the global economy

The International Monetary Fund (IMF) has issued a paper dubbed “The Future of Oil: Geology versus Technology.” The research paper is meant to provoke debate concerning the issue of oil and sustainability. Because of its two-fold approach to the issue, the IMF notes that the paper does not necessarily represent the views of the organization. The paper takes into consideration two points of view: The economic and technological approach used by the Energy Information Administration, and the geological approach, which concerns peak oil forecasts.

Both approaches have been shrouded in controversy for some time. The research paper notes that while both approaches are subject to problems, geological forecasts have recently proven to be more accurate than forecasts made through the economic/technological approach. The economic/technological approach, however, accounts for the financial factors that are inseparable from the world of oil. Both approaches are marred by inaccuracies. As such, the research paper aims to introduce a new forecast model than combines the two methods.

The composite model forecasts the future of oil by taking into account geological depletion and economic trends. According to the model, the future of oil may be cause for concern. First, the model predicts that the supply of oil will not increase as rapidly as it had done in the years before 2005. Oil prices are also expected to grow at a faster pace than average inflation and could reach new heights in 2020. If the latter prediction proves true, the world will be entering uncharted economic territory.

The paper is meant to draw attention to the issue and make people talk. This discussion may help people change the way they look at oil and other fossil-fuels and their place in the world. With alternative energy attracting more attention around the world, the issue of oil, and its financial implications, is no longer something that can be ignored.

The IMF research paper is available for free and can be found here.


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IMF: The Future of Oil, Geo vs. Techno

Unread postby Pops » Fri 11 May 2012, 07:10:07

Pretty interesting. This IMF paper looks at price forecasting by mainstreamers like Hamilton who think demand creates oil (or substitutes) and combines that idea with whacks like Deffeyes, Campbell and Hubbert.

I've only skimmed the paper but the conclusion explicitly forecasts a near term plateau if not peak, a doubling of price this decade and the possibility of "non-linear" effects on the economy and the continuation of technology itself.

Conclusion:
Our model performs far better than competing models in predicting either oil production or oil prices out of sample, in a field where predictability has historically been low. Our empirical results also indicate that, if the model’s predictions continue to be as accurate as they have been over the last decade, the future will not be easy. While our model is not as pessimistic as the pure geological view, which typically holds that binding resource constraints will lead world oil production onto an inexorable downward trend in the very near future, our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy, which has never experienced such prices for more than a few months. Our current model of the effect of such prices on GDP is based on historical data, and indicates perceptible but small and transitory output effects. But we suspect that there must be a pain barrier, a level of oil prices above which the effects on GDP becomes nonlinear, convex. We also suspect that the assumption that technology is independent of the availability of fossil fuels may be inappropriate, so that a lack of availability of oil may have aspects of a negative technology shock. In that case the macroeconomic effects of binding resource constraints could be much larger, more persistent, and they would extend well beyond the oil sector. Studying these issues further will be a priority of our future research.

http://www.imf.org/external/pubs/ft/wp/2012/wp12109.pdf
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