Oil price shocks and the macroeconomy

Segal, Paul (2011) Oil price shocks and the macroeconomy. Oxford Review of Economic Policy, 27 (1). pp. 169-185. ISSN 0266903X

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Abstract

This paper examines the impact of oil price shocks and attempts to explain why the rise in oil prices up to 2008 had little impact on the world economy. It makes three main arguments. First, that oil prices have never been as important as is popularly thought. Second, that the most important route through which oil prices affect output is monetary policy: when oil prices pass through to core inflation, monetary authorities raise interest rates, slowing growth. Based on the second argument, the third argument is that high oil prices have not reduced growth in recent years because they no longer pass through to core inflation, so the monetary tightening previously seen in response to high oil prices is absent. It also argues that oil prices had little impact on the global recession of 20089.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Depositing User: Paul Segal
Date Deposited: 06 Feb 2012 21:08
Last Modified: 16 Jul 2012 08:20
URI: http://sro.sussex.ac.uk/id/eprint/29752
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