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Oil Price Shocks and Currency Denomination (A revised version of EWP 2005-01)

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  • Wohltmann, Hans-Werner
  • Winkler, Roland C.

Abstract

The paper analyzes the dynamic effects of anticipated price increases of imported raw materials upon two large open economies. It is assumed that the economies have an asymmetric macroeconomic structure on the supply side and are dependent upon a small third country for oil or raw materials imports. The dynamic behavior of several macroeconomic variables is discussed both under US dollar and Euro-currency denomination. It is shown that with Euro-currency denominated oil the stagnationary effects of oil price increases upon both the domestic and foreign economy are reduced. The paper also discusses several monetary policy responses to oil price shocks. --

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Bibliographic Info

Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2005,10.

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Date of creation: 2005
Date of revision:
Handle: RePEc:zbw:cauewp:3196

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Fax: 0431-880 3150
Web page: http://www.wiso.uni-kiel.de/econ/
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Keywords: oil price shocks; international policy coordination; currency denomination;

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  17. Christophe Kamps & Christian Pierdzioch, 2002. "Monetary Policy Rules and Oil Price Shocks," Kiel Working Papers 1090, Kiel Institute for the World Economy.
  18. Bhandari, Jagdeep S., 1981. "The simple macroeconomics of an oil-dependent economy," European Economic Review, Elsevier, vol. 16(2), pages 333-354.
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