The Macroeconomic Effects of Higher Oil Prices
February 1, 2001
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Summary
The paper uses MULTIMOD to analyze the macroeconomic effects of oil price shocks, distinguishing between temporary, more persistent, and permanent shocks. It provides perspectives on several findings in the literature and the key role of monetary policy in influencing macroeconomic outcomes. Specific attention is paid to the channels through which oil price increases can pass through into core inflation, a possible explanation of the asymmetric relationship between oil prices and economic activity, the role of monetary policy credibility, the implications of delayed policy responses, and the relative merits of leaning in different directions when the correct policy response is uncertain.
Subject: Consumer price indexes, Deflation, Inflation, Inflation targeting, Monetary policy, Oil prices, Prices
Keywords: aggregate absorption price deflator, Consumer price indexes, core inflation effect, Deflation, Global, increase series, Inflation, inflation expectation, Inflation targeting, monetary policy, MULTIMOD, MULTIMOD input cost, nominal interest rate, oil price, oil price change, oil price decrease, oil price increase series, oil price shocks, Oil prices, oil-price effects, oil-price shock, price behavior, price nexus, shock pass, WP
Pages:
46
Volume:
2001
DOI:
Issue:
014
Series:
Working Paper No. 2001/014
Stock No:
WPIEA0142001
ISBN:
9781451843125
ISSN:
1018-5941
