Monetary Policy Trade-Offs with a Dominant Oil Producer
AbstractWe model oil production decisions from optimizing principles rather than assuming exogenous oil price shocks and show that the presence of a dominant oil producer leads to sizable static and dynamic distortions of the production process. Under our calibration, the static distortion costs the U.S. around 1.6% of GDP per year. In addition, the dynamic distortion, reflected in inefficient fluctuations of the oil price markup, generates a trade-off between stabilizing inflation and aligning output with its efficient level. Our model is a step away from discussing the effects of exogenous oil price variations and toward analyzing the implications of the underlying shocks that cause oil prices to change in the first place. Copyright (c) 2010 The Ohio State University.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 42 (2010)
Issue (Month): 1 (02)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Tao Wu & Michele Cavallo, 2012.
"Measuring Oil-Price Shocks Using Market-Based Information,"
IMF Working Papers
12/19, International Monetary Fund.
- Tao Wu & Michele Cavallo, 2009. "Measuring oil-price shocks using market-based information," Working Papers 0905, Federal Reserve Bank of Dallas.
- Michele Cavallo & Tao Wu, 2006. "Measuring oil-price shocks using market-based information," Working Paper Series 2006-28, Federal Reserve Bank of San Francisco.
- Deren Unalmis & Ibrahim Unalmis & Derya Filiz Unsal, 2012.
"On the Sources and Consequences of Oil Price Shocks : The Role of Storage,"
1230, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Deren Unalmis & Ibrahim Unalmis & D. Filiz Unsal, 2012. "On the Sources and Consequences of Oil Price Shocks: the Role of Storage," IMF Working Papers 12/270, International Monetary Fund.
- Ratti, Ronald A & Vespignani, Joaquin L., 2012.
"Crude Oil Prices and Liquidity, the BRIC and G3 countries,"
15727, University of Tasmania, School of Economics and Finance, revised 17 Dec 2012.
- Ratti, Ronald A. & Vespignani, Joaquin L., 2013. "Crude oil prices and liquidity, the BRIC and G3 countries," Energy Economics, Elsevier, vol. 39(C), pages 28-38.
- Ratti, Ronald A & Vespignani, Joaquin L., 2012. "Crude Oil Prices and Liquidity, the BRIC and G3 countries," MPRA Paper 44049, University Library of Munich, Germany.
- Lorenzo Forni & Andrea Gerali & Alessandro Notarpietro & Massimiliano Pisani, 2012. "Euro area and global oil shocks: an empirical model-based analysis," Temi di discussione (Economic working papers) 873, Bank of Italy, Economic Research and International Relations Area.
- Samuel Wills, 2014. "Optimal Monetry Responses to Oil Discoveries," OxCarre Working Papers 121, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
- Michael Plante, 2012.
"How should monetary policy respond to changes in the relative price of oil? considering supply and demand shocks,"
1202, Federal Reserve Bank of Dallas.
- Michael Plante, 2009. "How Should Monetary Policy Respond to Changes in the Relative Price of Oil? Considering Supply and Demand Shocks," Caepr Working Papers 2009-013, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
- Ano Sujithan, Kuhanathan & Koliai, Lyes & Avouyi-Dovi, Sanvi, 2013. "Does Monetary Policy Respond to Commodity Price Shocks?," Economics Papers from University Paris Dauphine 123456789/11718, Paris Dauphine University.
- Kilian, Lutz & Vigfusson, Robert J., 2011.
"Nonlinearities in the Oil Price-Output Relationship,"
CEPR Discussion Papers
8174, C.E.P.R. Discussion Papers.
- Kilian, Lutz & Vigfusson, Robert J., 2011. "Nonlinearities In The Oil Price–Output Relationship," Macroeconomic Dynamics, Cambridge University Press, vol. 15(S3), pages 337-363, November.
- Lutz Kilian & Robert J. Vigfusson, 2011. "Nonlinearities in the oil price-output relationship," International Finance Discussion Papers 1013, Board of Governors of the Federal Reserve System (U.S.).
- Bhanumurthy, N. R. & Das, Surajit & Bose, Sukanya, 2012. "Oil Price Shock, Pass-through Policy and its Impact on India," Working Papers 12/99, National Institute of Public Finance and Policy.
- Anton Nakov & Galo Nuño, 2011. "A general equilibrium model of the oil market," Banco de Espaï¿½a Working Papers 1125, Banco de Espa�a.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.