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The Macroeconomic Effects of Higher Oil Prices

Published online by Cambridge University Press:  26 March 2020

Benjamin Hunt ,
Peter Isard  and
Douglas Laxton
Douglas Laxton
Affiliation:
Research Department, International Monetary Fund
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Abstract

The paper uses MULTIMOD to analyse 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, the implications of delayed policy responses, and the relative merits of leaning in different directions when the correct policy response is uncertain.

Type
Research Article
Information
National Institute Economic Review , Volume 179 , January 2002 , pp. 87 - 103
Copyright
Copyright © 2002 National Institute of Economic and Social Research

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Footnotes

∗

The views expressed in this paper are those of the authors and do not necessarily reflect those of the IMF. The authors are grateful to John Helliwell and Warwick McKibbin for helpful discussions.

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