US Inflation and Crude Oil Prices. An International Perspective

Wolfgang Pollan
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Wolfgang Pollan: WIFO

No 451, WIFO Working Papers from WIFO

Abstract: This paper explores the question to what extent non-domestic factors provide an explanation of US inflation over the last three decades. Are lagged dependent variables – traditionally interpreted as proxies for inflation expectations – simply proxies for oil and commodity prices? The results of a Phillips curve covering the years from the first oil price shock to the year 2014 show that crude oil prices, which basically are world market prices, have exerted a strong influence on inflation, while inflation expectations have played a much feebler role in the inflation process since the "Volcker" disinflation. Over the years the effects of domestic factors, such as the unemployment rate, have weakened.

Keywords: Commodity prices; Phillips Curve; expectations; inflation; monetary policy (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-06
New Economics Papers: this item is included in nep-cwa, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2013:i:451

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