Energy and Capital in a New-Keynesian Framework

Verónica Acurio Vásconez, Gaël Giraud, Florent Mc Isaac and Ngoc Sang Pham
Additional contact information
Florent Mc Isaac: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr
Ngoc Sang Pham: Centre d'Economie de la Sorbonne, https://centredeconomiesorbonne.cnrs.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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; DSGE; oil; capital accumulation; stagflation (search for similar items in EconPapers)
JEL-codes: C11 C53 Q31 Q32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-12
New Economics Papers: this item is included in nep-dge and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://mse.univ-paris1.fr/pub/mse/CES2012/12092.pdf (application/pdf)

Related works:
Working Paper: Energy and Capital in a New-Keynesian Framework (2012)
Working Paper: Energy and Capital in a New-Keynesian Framework (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12092

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