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Energy and Capital in a New-Keynesian Framework

Verónica Acurio Vásconez (), Gaël Giraud (), Florent Mc Isaac () and Ngoc-Sang Pham ()
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Gaël Giraud: PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Florent Mc Isaac: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Authors registered in the RePEc Author Service: Florent John McIsaac ()

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Abstract: The economic implications of oil price shocks have been extensively studied since the oil price shocks of the 1970s'. Despite this huge literature, no dynamic stochastic general equilibrium model is available that captures two well-known stylized facts: 1) the stagflationary impact of an oil price shock, together with 2) two possible reactions of real wages: either a decrease (as in the US) or an increase (as in Japan). We construct a New-Keynesian DSGE model, which takes the case of an oil-importing economy where oil cannot be stored and where fossil fuels are used in two different ways: One part of the imported energy is used as an additional input factor next to capital and labor in the intermediate production of manufactured goods, the remaining part of imported energy is consumed by households in addition to their consumption of the final good. Oil prices, capital prices and nominal government spendings are exogenous random processes. We show that, without capital accumulation, the stagflationary effect is accounted for in general, and provide conditions under which a rise (resp. a declinr) of real wages follows the oil price shock.

Keywords: New-Keynesian model; Oil; Capital Accumulation; Stagflation; Accumulation du capital; Modèle néo-keynésien; DSGE; Pétrole (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-dge, nep-ene and nep-mac
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00827666
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Published in 2012

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Related works:
Working Paper: Energy and Capital in a New-Keynesian Framework (2012) Downloads
Working Paper: Energy and Capital in a New-Keynesian Framework (2012) Downloads
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