Has Sweden “Struck Oil”? Exchange Rate Implications of Large Natural Resource Discoveries

Abstract

With the global shift towards renewable energy and sustainable development, what are considered important natural resources and the value thereof, is undergoing a change, particularly as new technologies develop. The effects of natural resources on macroeconomic factors have been debated for centuries, and while some countries have sustainably managed their natural resources, empirical evidence shows that positive effects should not be taken for granted. By using a staggered difference-in-difference methodology, this research aims to continue the discussion of economic consequences from valuable natural resource discoveries by specifically investigating anticipatory exchange rate effects from large oil and gas discoveries. While allowing limited conclusions to be drawn, this study hopes to contribute to further research while also highlighting caution in using staggered difference-in-difference analysis, emphasising careful control group selection when seeing heterogeneous treatment effects, and recommends revisiting past studies to uncover biases.