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Reports on expectations for future world market of natural gas to become highly dependent on interactions. Impact of natural gas price regulation on opportunities for international arbitrage; Emergence of liquefied natural gas (LNG) project developers who are recognizing the real option value of destination flexibility; Efforts of these developers to find ways in which flexibility can assist them to maximize returns throughout the LNG value chain.

Using a simple model of a small open economy which includes traded and non-traded goods and output in two periods, we demonstrate that changes in real interest rates will be associated with changes in real exchange rates. A high real interest rate will encourage consumers to substitute away from present and toward future consumption. To transfer consumption of non-traded goods intertemporally, intersectoral resource flows are required. In the simplest model, this in turn requires opposite movements in the real exchange rate over two periods. [ABSTRACT FROM AUTHOR]