International Dimensions of Monetary Policy
International Dimensions of Monetary Policy

Author: Jordi Galí

Publisher: University of Chicago Press

Published: 2010-03-15

Total Pages: 663

ISBN-13: 0226278875

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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.

Macroeconomic Implications of Oil Price Fluctuations
Macroeconomic Implications of Oil Price Fluctuations

Author: Federic Holm-Hadulla

Publisher:

Published: 2018

Total Pages: 45

ISBN-13:

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We investigate whether the response of the macro-economy to oil price shocks undergoes episodic changes. Employing a regime-switching vector autoregressive model we identify two regimes that are characterized by qualitatively different patterns in economic activity and inflation following oil price shocks in the euro area. In the normal regime, oil price shocks trigger only limited and short-lived adjustments in these variables. In the adverse regime, by contrast, oil price shocks are followed by sizeable and sustained macroeconomic fluctuations, with inflation and economic activity moving in the same direction as the oil price. The responses of inflation expectations and wage growth point to second-round effects as a potential driver of the dynamics characterising the adverse regime. The systematic response of monetary policy works against such second-round effects in the adverse regime but is insufficient to fully offset them. The model also delivers (conditional) probabilities for being (staying) in either regime, which may help interpret oil price fluctuations - and inform deliberations on the adequate policy response - in real-time.

Monetary Policy and the Oil Market
Monetary Policy and the Oil Market

Author: Naoyuki Yoshino

Publisher: Springer

Published: 2016-03-04

Total Pages: 155

ISBN-13: 4431557970

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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"/>

On the Sources of Oil Price Fluctuations
On the Sources of Oil Price Fluctuations

Author: Deren Unalmis

Publisher: International Monetary Fund

Published: 2009-12-01

Total Pages: 30

ISBN-13: 1451874308

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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.

Oil Prices and the Global Economy
Oil Prices and the Global Economy

Author: Mr.Rabah Arezki

Publisher: International Monetary Fund

Published: 2017-01-27

Total Pages: 30

ISBN-13: 1475572360

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This paper presents a simple macroeconomic model of the oil market. The model incorporates features of oil supply such as depletion, endogenous oil exploration and extraction, as well as features of oil demand such as the secular increase in demand from emerging-market economies, usage efficiency, and endogenous demand responses. The model provides, inter alia, a useful analytical framework to explore the effects of: a change in world GDP growth; a change in the efficiency of oil usage; and a change in the supply of oil. Notwithstanding that shale oil production today is more responsive to prices than conventional oil, our analysis suggests that an era of prolonged low oil prices is likely to be followed by a period where oil prices overshoot their long-term upward trend.

Global Implications of Lower Oil Prices
Global Implications of Lower Oil Prices

Author: Mr.Aasim M. Husain

Publisher: International Monetary Fund

Published: 2015-07-14

Total Pages: 41

ISBN-13: 151357227X

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The sharp drop in oil prices is one of the most important global economic developments over the past year. The SDN finds that (i) supply factors have played a somewhat larger role than demand factors in driving the oil price drop, (ii) a substantial part of the price decline is expected to persist into the medium term, although there is large uncertainty, (iii) lower oil prices will support global growth, (iv) the sharp oil price drop could still trigger financial strains, and (v) policy responses should depend on the terms-of-trade impact, fiscal and external vulnerabilities, and domestic cyclical position.

The Distributional Implications of the Impact of Fuel Price Increases on Inflation
The Distributional Implications of the Impact of Fuel Price Increases on Inflation

Author: Mr. Kangni R Kpodar

Publisher: International Monetary Fund

Published: 2021-11-12

Total Pages: 34

ISBN-13: 1616356154

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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.

On the Sources and Consequences of Oil Price Shocks
On the Sources and Consequences of Oil Price Shocks

Author: Deren Unalmis

Publisher: International Monetary Fund

Published: 2012-11-08

Total Pages: 41

ISBN-13: 1475598432

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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.

Crude Oil Price Fluctuations
Crude Oil Price Fluctuations

Author: Daisy Michel Edde

Publisher:

Published: 2010

Total Pages: 202

ISBN-13:

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Since the 1970s, the world has experienced several oil price changes with cruel impact on global macroeconomic factors. The first oil price shocks in 1973 provoked the attention of many and the ambiguous relation between oil prices and economic activity encouraged several people to study its trends, causes and short term and long term consequences. Are oil prices linked to the law of the market, to political events, to speculation or future expectations? --Everybody reached the conclusion that oil price fluctuations stimulated inflation and generated recessions but each one got it differently. --In this thesis, we will test the relationship between crude oil price fluctuations and several macroeconomic factors from 1970 to 2009. In addition, an estimation of the impact of oil price shocks on the world economy is done. Chapter 1 is a general introduction about the energy industry particularly oil, and a brief description about the different chapters. Chapter 2 described the major events that happened from the 1970s until 2010 and that affected oil prices hence the macroeconomic performance i.e. Yom Kippur war, Iranian Revolution, Gulf war, Asian Financial Crisis, the sequence of Hurricanes, 2008 Great Recession. Chapter 3 is a discussion of previous studies related to this subject. It helps us identify better the nature of the relation between oil and macroeconomic factors from different point of views. In chapter 4, through the Granger causality test applied on 15 countries, we will analyze how crude oil price fluctuations affect them individually then to analyze the effect of oil price shocks on the global economy, an estimation of these shocks on the world economy is done. It focuses on two oil shocks: The Oil price shocks of 1973 and1985.

Measuring Oil-Price Shocks Using Market-Based Information
Measuring Oil-Price Shocks Using Market-Based Information

Author: Tao Wu

Publisher: DIANE Publishing

Published: 2010-10

Total Pages: 41

ISBN-13: 1437935583

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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.