Optimal monetary policy response to endogenous oil price fluctuations

Arnoud Stevens

No 277, Working Paper Research from National Bank of Belgium

Abstract: Should the central bank seek to identify the underlying causes of oil price hikes in determining appropriate policy responses to them? Most likely not. Within a calibrated new-Keynesian model of Oil-Importing and Oil-Producing Countries, I derive the Ramsey policy and analyze optimal monetary policy responses to different sources of oil price fluctuations. I find that oil-specific demand and supply shocks call for similar policy responses, given the low substitutability of oil in production and the incompleteness of international asset markets.

Keywords: Oil Prices; Optimal Monetary Policy; Ramsey Approach; Welfare Analysis (search for similar items in EconPapers)
JEL-codes: E52 E61 Q43 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2015-01
New Economics Papers: this item is included in nep-cba, nep-ene, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.nbb.be/doc/ts/publications/wp/wp277en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:201501-277

Access Statistics for this paper

More papers in Working Paper Research from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().