Abstract
The natural gas revolution in Israel started about two decades ago. Its numerous social impacts include moving to cleaner energy, improving energy security and the balance of trade, tightening international relations, and increasing tax revenue. However, “Dutch disease” phenomena—where the accelerated export of natural gas leads to the strengthening of the local currency, the subsequent weakening of other exporting industries, and rising unemployment—might suck Israel into the economic slowdown. This study examines whether the strengthening of the New Israeli Shekel (ILS) in recent years is a symptom of “Dutch disease”. It is expected that the large-scale export of natural gas will start in 2021 with the development of the major offshore field “Leviathan”. Notably, ILS has been appreciating for several years already. We employed the event study approach to analyze the fluctuations of the daily ILS/USD real exchange rate in the years 2009–2017, combined with the media announcements related to the gas discoveries published during this period. The results revealed that gas-related news does affect the exchange rate and appreciate ILS. GARCH analysis confirms the results.
| Original language | English |
|---|---|
| Article number | 2752 |
| Journal | Energies |
| Volume | 12 |
| Issue number | 14 |
| DOIs | |
| State | Published - 2019 |
Bibliographical note
Publisher Copyright:© 2019 by the authors.
Keywords
- Announcements
- Currency appreciation
- Dutch disease
- Event study
- Expectations
- Export
- Natural gas
- Real exchange rate
ASJC Scopus subject areas
- Renewable Energy, Sustainability and the Environment
- Fuel Technology
- Energy Engineering and Power Technology
- Energy (miscellaneous)
- Control and Optimization
- Electrical and Electronic Engineering