Through a glass darkly: Deciphering the impact of oil price shocks

Ashima Goyal and Arjun Singh ()
Additional contact information
Arjun Singh: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: In order to examine if the impact of oil price shocks depends on the structure of an economy, a vertical (VSC) and a horizontal (HSC) long-run supply curve identification are successively imposed on a three variable VAR with Indian time series data. While core inflation is measured with the VSC, the HSC requires a new concept of demand-driven inflation: Residual (demand) inflation, which gives the impact of short and medium run demand shocks on inflation. Core and residual inflation are both estimated. The data favors the HSC, but both identifications imply that policy demand squeeze aggravated international oil price shocks.

Keywords: Oil Shocks; VAR; Identification strategies; Developing economy; Residual Inflation (search for similar items in EconPapers)
JEL-codes: C32 E31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2006-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.igidr.ac.in/pdf/publication/WP-2006-012.pdf (application/pdf)

Related works:
Working Paper: Through a Glass Darkly: Deciphering the Impact of Oil Price Shocks (2009)
Working Paper: Through a Glass Darkly - Deciphering the Impact of Oil Price Shocks (2006)
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:ind:igiwpp:2006-012

Access Statistics for this paper

More papers in Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India Contact information at EDIRC.
Bibliographic data for series maintained by Shamprasad M. Pujar ().