Strategic Energy System for Analyzing Macroeconomic Effects (SESAME)

An obvious concern for U.S. energy policymakers is the nation's dependence on foreign sources of crude oil. In this Note the authors describe an approach to modeling the short-run consequences of a disruption of supply of crude oil. The approach takes the form of a simulation-oriented econometric model designed to analyze the effects of exogenous supply disruptions on key economic indicators such as unemployment, Gross National Product, and price levels across 45 industrial sectors. Section II presents an overview of the different types of macro models currently in circulation. The Strategic Energy System for Analyzing Macro Effects (SESAME) combines characteristics of several types of macro models. Such a hybrid, described in Sec. III, uses different approaches to modeling different parts of the economy. The present version of SESAME still makes a number of simplifying assumptions. Section IV lists the most important ones and outlines ways in which they could be relaxed in future versions. The Appendix provides a sample output.