Comment on Rasche and Tatom, “energy price shocks, aggregate supply and monetary policy: The theory and the international evidence”

AbstractA New Keynesian framework with endogenous energy production is proposed to investigate the role of monetary policy in addressing disturbances in energy markets. The novelty of the model lies in the endogenous production of energy with convex costs, explicit modeling of goods with different degrees of energy-dependency and sectoral price rigidities. Our analyses prescribe the desirable monetary responses to four types of energy price shocks, highlighting the distinct characteristics of each shock and affirming the need for diverse policy considerations. We also found several points of divergence in relation to previous studies on addressing energy supply shocks. In addition, we shed light on the role of sectoral price rigidities in the shocks’ propagation.

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Monetary policy and energy price shocks

energyo ◽

10.1515/energyo.0009.00002 ◽

2019 ◽

Author(s):

Bao Tan Huynh

Keyword(s):

Monetary Policy ◽

Energy Price ◽

Price Shocks

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Energy price shocks, monetary policy and China's economic fluctuations

Asian-Pacific Economic Literature ◽

10.1111/apel.12108 ◽

2015 ◽

Vol 29 (1) ◽

pp. 126-141 ◽

Cited By ~ 5

Author(s):

Yunqing Wang ◽

Qigui Zhu

Keyword(s):

Monetary Policy ◽

Economic Fluctuations ◽

Energy Price ◽

Price Shocks

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Monetary policy and the effect of the transfer of oil prices to inflation

Voprosy Ekonomiki ◽

10.32609/0042-8736-2020-8-41-50 ◽

2020 ◽

pp. 41-50

Author(s):

Ph. S. Kartaev ◽

I. D. Medvedev

Keyword(s):

Monetary Policy ◽

Inflation Targeting ◽

Dynamic Models ◽

Oil Prices ◽

Oil Price ◽

Oil Price Shocks ◽

Negative Effects ◽

Price Shocks ◽

Policy Regime ◽

The Impact

The paper examines the impact of oil price shocks on inflation, as well as the impact of the choice of the monetary policy regime on the strength of this influence. We used dynamic models on panel data for the countries of the world for the period from 2000 to 2017. It is shown that mainly the impact of changes in oil prices on inflation is carried out through the channel of exchange rate. The paper demonstrates the influence of the transition to inflation targeting on the nature of the relationship between oil price shocks and inflation. This effect is asymmetrical: during periods of rising oil prices, inflation targeting reduces the effect of the transfer of oil prices, limiting negative effects of shock. During periods of decline in oil prices, this monetary policy regime, in contrast, contributes to a stronger transfer, helping to reduce inflation.

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