Monetary Policy Rules and Oil Price Shocks

Arbeitspapier

This paper studies the relative performance of alternative monetary policy rules in the presence of oil price shocks in a small open economy optimizing model. Our analysis shows that it is important to distinguish between alternative price indices (CPI, core CPI, and GDP deflator) when modeling the effects of oil price increases. This distinction has important implications for monetary policy as the central bank has to decide which inflation rate to target. Our results demonstrate that targeting the change in the GDP deflator is an inferior monetary policy strategy in the presence of oil price shocks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1090

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Monetary Policy ; Central Banks and Their Policies ; Price Level; Inflation; Deflation ; Open Economy Macroeconomics
• Subject: Monetary policy rules ; Open economy ; Oil price shocks ; Price indices ; Geldpolitik ; Geldpolitisches Ziel ; Kleines-offenes-Land ; Dynamische Optimierung ; Mineralölpreisschock ; Inflation Targeting ; Preisindex ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pierdzioch, Christian ; Kamps, Christophe
• Event: Veröffentlichung
• (who): Kiel Institute of World Economics (IfW)
• (where): Kiel
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/17748
• Last update: 10.03.2025, 11:43 AM CET