 Incidencia de los Choques Externos y Domésticos sobre la Dinámica de la Inflación: Evidencia a partir de un VAR BayesianoIncidence of External and Domestic Shocks on Inflation Dynamics: Evidence from a Bayesian VARMiguel Jiménez Polanco and Francisco Ramírez de León () MPRA Paper from University Library of Munich, Germany Abstract: This paper analyzes the effect of an oil shock on some key macroeconomic variables for the case of the Dominican Republic, particularly the response of inflation and real economic activity. In addition, the elasticity of short run and long run term on petroleum derivatives commonly used in the Dominican Republic are estimated. A Bayesian VAR is used to evaluate the effect of an unanticipated increase of 10% in the price of oil. wing conclusions: 1) changes in oil prices have significant effects on the dynamics of non-core component of inflation, as well as other macroeconomic variables, except for core inflation; 2) to curb inflation, monetary policy reacts in a restrictive way, resulting in a temporary appreciation of the real exchange rate, as a result of rising interest rates; 3) real economic activity responds negatively deviating from its long-term trend with effects that persists over one year 4) last, but not least: historical decomposition shows that the non-core component of inflation is explained by a decrease of oil prices. Keywords: Oil prices; inflation; business cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:68334 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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