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Nature of Oil Price Shocks and Monetary Policy

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  • Junhee Lee
  • Joonhyuk Song

Abstract

We investigate the nature of oil price shocks to the Korean economy in recent years and find that the recent hike in oil price is induced by the increase in oil demand in contrast to the previous years when oil price run-up is mostly from supply disruptions. We also study how monetary responses to oil price shocks affect economic stability and find that an accommodative policy yields more stable outcomes.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15306.

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Date of creation: Sep 2009
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Handle: RePEc:nbr:nberwo:15306

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Cited by:
  1. Junhee Lee & Joonhyuk Song, 2011. "Oil and Macroeconomy: The Case of Korea," NBER Chapters, in: Commodity Prices and Markets, East Asia Seminar on Economics, Volume 20, pages 263-290 National Bureau of Economic Research, Inc.

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