 Impact of Expansionary Monetary Policy on Crude Oil PricesFarhad Taghizadeh-Hesary () and Naoyuki Yoshino () Chapter Chapter 2 in Monetary Policy and the Oil Market, 2016, pp 7-27 from Springer Abstract: Abstract While the oil price shocks of the 1970s can be explained by pure supply factors, starting in the 1980s oil prices increasingly began to come under a different type of pressure. Oil prices accelerated from about $35 per barrel in 1981 to beyond $111 per barrel in 2011. At the same time interest rates subsided from 16.7 % per annum to about 0.1 %. This chapter explains how this long-term price increase in most cases, was caused by expansionary monetary policies that heightened oil prices through interest rate channels. Aggressive monetary policies stimulated oil demand and blew up oil prices, a trend that led to slower economic growth. As for elasticities the results described in this chapter show that demand is price elastic and, unlike some earlier literature states, it is significantly elastic to income too. In the last section, the results show that oil prices adjust instantly, declaring the existence of equilibrium in the oil market during the period from 1960 to 2011. Keywords: Oil market; Monetary policy; Interest rate; Equilibrium vs. disequilibrium (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:adbchp:978-4-431-55797-5_2 Ordering information: This item can be ordered from DOI: 10.1007/978-4-431-55797-5_2 Access Statistics for this chapter More chapters in ADB Institute Series on Development Economics from Springer |
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