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Monetary Policy Dynamics in Large Oil-Dependent Economies

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

Abstract

The paper analyzes the impacts of anticipated and unanticipated monetary policies on two large open economies that are dependent upon raw materials imports from a small third country. The analysis is based on asymmetric behavior on the supply side of both economies and an endogenous commod- ity pricing equation of Phillips' curve type. It is shown that an increase in the growth rate of domestic money supply is not neutral in the long run but induces contractionary output effects in both economies. The paper also dis- cusses the impacts of monetary policy rules that either reduce the in°ationary or contractionary output effects of commodity 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 2005,17.

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Date of creation: 2005
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Handle: RePEc:zbw:cauewp:3834

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Fax: 0431-880 3150
Web page: http://www.wiso.uni-kiel.de/econ/
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Related research

Keywords: Monetary Policy; Oil Price Shocks; International Policy Coordination;

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References

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  1. Buiter, Willem H. & Miller, Marcus, 1982. "Real exchange rate overshooting and the output cost of bringing down inflation," European Economic Review, Elsevier, vol. 18(2), pages 85-123.
  2. Bennett T. McCallum, 2001. "Should Monetary Policy Respond Strongly to Output Gaps?," NBER Working Papers 8226, National Bureau of Economic Research, Inc.
  3. Bhandari, Jagdeep S. & Turnovsky, Stephen J., 1984. "Materials price increases and aggregate adjustment in an open economy : A Stochastic Approach," European Economic Review, Elsevier, vol. 25(2), pages 151-182, July.
  4. Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
  5. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," CEPR Discussion Papers 1131, C.E.P.R. Discussion Papers.
  6. Aoki, Masanao, 1975. "On a Generalization of Tinbergen's Condition in the Theory of Policy to Dynamic Models," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 293-96, April.
  7. Stephen J. Turnovsky, 1986. "Monetary and Fiscal Policy Under Perfect Foresight: A Symmetric Two Country Analysis," NBER Working Papers 1699, National Bureau of Economic Research, Inc.
  8. Clausen, Volker & Wohltmann, Hans-Werner, 2002. "Monetary and fiscal policy dynamics in an asymmetric monetary union," IBES Diskussionsbeiträge 119, University of Duisburg-Essen, Faculty for Economics and Business Administration.
  9. Bhandari, Jagdeep S., 1981. "The simple macroeconomics of an oil-dependent economy," European Economic Review, Elsevier, vol. 16(2), pages 333-354.
  10. Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
  11. van der Ploeg, Frederick, 1987. "International Interdependence and Policy Coordination in Economies with Real and Nominal Wage Rigidity," CEPR Discussion Papers 217, C.E.P.R. Discussion Papers.
  12. Robert Anderton & Filippo di Mauro & Fabio Moneta, 2004. "Understanding the impact of the external dimension on the euro area - trade, capital flows and other international macroeconomic linkages," Occasional Paper Series 12, European Central Bank.
  13. Manasse, Paolo, 1991. "Fiscal Policy in Europe: The Credibility Implications of Real Wage Rigidity," Oxford Economic Papers, Oxford University Press, vol. 43(2), pages 321-39, April.
  14. Stephen J. Turnovsky, 2000. "Methods of Macroeconomic Dynamics, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262201232, December.
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