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Monetary Policy Response To Oil Price Shocks
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Book Synopsis Monetary Policy Response to Oil Price Shocks by : Jean-Marc Natal
Download or read book Monetary Policy Response to Oil Price Shocks written by Jean-Marc Natal and published by DIANE Publishing. This book was released on 2010 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should monetary authorities react to an oil price shock? A trade-off between stabilizing inflation and the welfare relevant output gap arises in a distorted economy once one recognizes: (1) that oil (energy) cannot be easily substituted by other factors in the short-run; (2) that there is no fiscal transfer available to policymakers to neutralize the steady-state distortion due to monopolistic competition; and (3) that increases in oil prices also directly affect consumption by raising the price of fuel, heating oil, and other energy sources. The author derives an interest rate feedback rule that mimics the optimal plan in all relevant dimensions but that depends only on observables, namely core inflation, oil price inflation, and the growth rate of output. Illus.
Book Synopsis International Dimensions of Monetary Policy by : Jordi Galí
Download or read book International Dimensions of Monetary Policy written by Jordi Galí and published by University of Chicago Press. This book was released on 2010-03-15 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.
Book Synopsis The Optimal Response of Monetary Policy to Oil Price Shocks by : Robert DeFina
Download or read book The Optimal Response of Monetary Policy to Oil Price Shocks written by Robert DeFina and published by . This book was released on 1989 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Systematic Monetary Policy and the Effects of Oil Price Shocks by : Ben Bernanke
Download or read book Systematic Monetary Policy and the Effects of Oil Price Shocks written by Ben Bernanke and published by . This book was released on 1997 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Measuring Oil-Price Shocks Using Market-Based Information by : Tao Wu
Download or read book Measuring Oil-Price Shocks Using Market-Based Information written by Tao Wu and published by DIANE Publishing. This book was released on 2010-10 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors study the effects of oil-price shocks on the U.S economy combining narrative and quantitative approaches. After examining daily oil-related events since 1984, they classify them into various event types. They then develop measures of exogenous shocks that avoid endogeneity and predictability concerns. Estimation results indicate that oil-price shocks have had substantial and statistically significant effects during the last 25 years. In contrast, traditional vector auto-regression (VAR) approaches imply much weaker and insignificant effects for the same period. This discrepancy stems from the inability of VARs to separate exogenous oil-supply shocks from endogenous oil-price fluctuations driven by changes in oil demand. Illustrations.
Book Synopsis Monetary Policy Responses to Crude Oil-Price Shocks by : Austin Mwange
Download or read book Monetary Policy Responses to Crude Oil-Price Shocks written by Austin Mwange and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the establishment of Central Banks, they have been responsible for their national economic stabilization. This paper explores how selected banks have responded to oil price shocks. Firstly, the paper provides a critical analysis of the effects of commodity price shocks using a version of the three equations - the New Keynesian model. Secondly, the paper chronologically investigates past responses to shocks from five central banks, emphasizing similar and extreme responses and their success. Lastly, the paper utilizes the historical analysis to formulate a recommended response for central banks today. The major outcome of this study is the culmination of a recommendation that proactively implementing contractionary monetary policy alongside expansionary fiscal policy, using conventional and unconventional policies is the most effective.
Book Synopsis The Distributional Implications of the Impact of Fuel Price Increases on Inflation by : Mr. Kangni R Kpodar
Download or read book The Distributional Implications of the Impact of Fuel Price Increases on Inflation written by Mr. Kangni R Kpodar and published by International Monetary Fund. This book was released on 2021-11-12 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.
Book Synopsis Monetary Policy and the Oil Market by : Naoyuki Yoshino
Download or read book Monetary Policy and the Oil Market written by Naoyuki Yoshino and published by Springer. This book was released on 2016-03-04 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt: While oil price fluctuations in the past can be explained by pure supply factors, this book argues that it is monetary policy that plays a significant role in setting global oil prices. It is a key factor often neglected in much of the earlier literature on the determinants of asset prices, including oil prices. However, this book presents a framework for modeling oil prices while incorporating monetary policy. It also provides a complete theoretical basis of the determinants of crude oil prices and the transmission channels of oil shocks to the economy. Moreover, using several up-to-date surveys and examples from the real world, this book gives insight into the empirical side of energy economics. The empirical studies offer explanations for the impact of monetary policy on crude oil prices in different periods including during the subprime mortgage crisis of 2008–2009, the impact of oil price variations on developed and emerging economies, the effectiveness of monetary policy in the Japanese economy incorporating energy prices, and the macroeconomic impacts of oil price movements in trade-linked cases. This must-know information on energy economics is presented in a reader-friendly format without being overloaded with excessive and complicated calculations. enUsed="false" QFormat="true" Name="Subtle Emphasis"/>
Book Synopsis Monetary Policy and the Effects of Oil Price Shocks on the Japanese Economy by : Byung Rhae Lee
Download or read book Monetary Policy and the Effects of Oil Price Shocks on the Japanese Economy written by Byung Rhae Lee and published by . This book was released on 1998 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: The evidence of output decreases and price level increases following oil price shocks in the Japanese economy is presented in this paper. These negative effects of oil shocks are better explained by Hamilton's (1996) net oil price increase measure (NOPI) than by other oil measures. The fact that an oil shock has a statistically significant effect on the call money rate and real output and that the call money rate also has a statistically significant effect on real output appears to explain that the effects of oil price shocks on economic activity are partially attributed to contractionary monetary policy responses. The asymmetric effects of positive and negative oil shocks are also found in the Japanese economy and this asymmetry can also be partially explained by monetary policy responses. To assess the relative contribution of oil shocks and endogenous monetary policy responses to the economic downturns, I shut off the responses of the call money rate to oil shocks utilizing the impulse response results from the VAR model. Then, I re-run the VAR with the adjusted call money rate series. The empirical results show that around 30-40% of the negative effects of oil price shocks on the Japanese economy can be accounted for by oil shock induced monetary tightening.
Book Synopsis Oil Prices and Inflation Dynamics: Evidence from Advanced and Developing Economies by : Sangyup Choi
Download or read book Oil Prices and Inflation Dynamics: Evidence from Advanced and Developing Economies written by Sangyup Choi and published by International Monetary Fund. This book was released on 2017-09-05 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of fluctuations in global oil prices on domestic inflation using an unbalanced panel of 72 advanced and developing economies over the period from 1970 to 2015. We find that a 10 percent increase in global oil inflation increases, on average, domestic inflation by about 0.4 percentage point on impact, with the effect vanishing after two years and being similar between advanced and developing economies. We also find that the effect is asymmetric, with positive oil price shocks having a larger effect than negative ones. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy. We further examine the transmission channels of oil price shocks on domestic inflation during the recent decades, by making use of a monthly dataset from 2000 to 2015. The results suggest that the share of transport in the CPI basket and energy subsidies are the most robust factors in explaining cross-country variations in the effects of oil price shocks during the this period.
Book Synopsis World Crude Oil Markets by : Noureddine Krichene
Download or read book World Crude Oil Markets written by Noureddine Krichene and published by International Monetary Fund. This book was released on 2006 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relationship between monetary policy and oil prices within a world oil demand and supply model. Low price and high income elasticities of demand and rigid supply explain high price volatilities and producers' market power. Exchange and interest rates do influence oil market equilibrium. The relationship between oil prices and interest rates is a two-way relationship that depends on the type of oil shock. During a supply shock, rising oil prices caused interest rates to increase; whereas during a demand shock, falling interest rates caused oil prices to rise. Record low interest rates led to high oil price volatility in 2005. Data shows that world economic growth and price stability require stable oil markets and therefore more prudent monetary policies.
Book Synopsis Monetary Policy and Oil Price Shocks by : Robert DeFina
Download or read book Monetary Policy and Oil Price Shocks written by Robert DeFina and published by . This book was released on 1992 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Resource Prices and Macroeconomic Policies by : Graeme Ernest John Llewellyn
Download or read book Resource Prices and Macroeconomic Policies written by Graeme Ernest John Llewellyn and published by O.E.C.D.. This book was released on 1983 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis On the Sources and Consequences of Oil Price Shocks by : Deren Unalmis
Download or read book On the Sources and Consequences of Oil Price Shocks written by Deren Unalmis and published by International Monetary Fund. This book was released on 2012-11-08 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Building on recent work on the role of speculation and inventories in oil markets, we embed a competitive oil storage model within a DSGE model of the U.S. economy. This enables us to formally analyze the impact of a (speculative) storage demand shock and to assess how the effects of various demand and supply shocks change in the presence of oil storage facility. We find that business-cycle driven oil demand shocks are the most important drivers of U.S. oil price fluctuations during 1982-2007. Disregarding the storage facility in the model causes a considerable upward bias in the estimated role of oil supply shocks in driving oil price fluctuations. Our results also confirm that a change in the composition of shocks helps explain the resilience of the macroeconomic environment to the oil price surge after 2003. Finally, speculative storage is shown to have a mitigating or amplifying role depending on the nature of the shock.
Book Synopsis Macroeconomic Impacts of Energy Shocks by : H.G. Huntington
Download or read book Macroeconomic Impacts of Energy Shocks written by H.G. Huntington and published by Elsevier. This book was released on 2016-10-19 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt: Large-scale macroeconomic models have been used extensively to analyze a wide range of important economic issues. They were originally developed to study the economy's response to monetary and fiscal policies. During the 1970s these models were expanded and revised to track the inflationary processes and to incorporate key energy variables so that they could be used to examine the impacts of energy price shocks.This study compares the responses of 14 prominent macroeconomic models to supply-side shocks in the form of sudden energy price increases or decreases and to policies for lessening the impacts of price jumps. Four energy price shocks were examined: oil price increases of 50 and 20 percent, an oil price reduction of 20 percent, and an 80 percent increase in domestic natural gas prices. Five policy responses were considered for offsetting the GNP impacts of the larger oil price increase: monetary accommodation, an income tax rate reduction, an increase in the investment tax credit for equipment, a reduction in the employer's payroll tax rate, and an oil stockpile release.The study was conducted by a working group comprised of about 40 modelers and potential model users from universities, business, and government. As in previous EMF studies, the group pursued two broad goals. Firstly, they sought to understand the models themselves by identifying important similarities as well as structural differences. Secondly, they sought to use the models to sharpen their understanding of energy shocks and of the related policy issues. Their conclusions appear as the first chapter in this volume, the remaining chapters providing more technical treatment of the key structural differences among the participating models as well as their use for evaluating energy policies.This volume is addressed particularly to those interested in the energy shock issue, as well as to those with a broader interest in macroeconomic models and policies.
Book Synopsis On the Sources of Oil Price Fluctuations by : Deren Unalmis
Download or read book On the Sources of Oil Price Fluctuations written by Deren Unalmis and published by International Monetary Fund. This book was released on 2009-12-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzing macroeconomic impacts of oil price changes requires first to investigate different sources of these changes and their distinct effects. Kilian (2009) analyzes the effects of an oil supply shock, an aggregate demand shock, and a precautionary oil demand shock. The paper's aim is to model macroeconomic consequences of these shocks within a new Keynesian DSGE framework. It models a small open economy and the rest of the world together to discover both accompanying effects of oil price changes and their international transmission mechanisms. Our results indicate that different sources of oil price fluctuations bring remarkably diverse outcomes for both economies.
Book Synopsis Nature of oil price shocks and monetary policy by : Junhee Lee
Download or read book Nature of oil price shocks and monetary policy written by Junhee Lee and published by . This book was released on 2009 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the nature of oil price shocks to the Korean economy in recent years and find that the recent hike in oil price is induced by the increase in oil demand in contrast to the previous years when oil price run-up is mostly from supply disruptions. We also study how monetary responses to oil price shocks affect economic stability and find that an accommodative policy yields more stable outcomes.
