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The impact of oil price changes on Spanish and euro area consumer price inflation

Author Info

  • Álvarez, Luis J.
  • Hurtado, Samuel
  • Sánchez, Isabel
  • Thomas, Carlos

Abstract

This paper assesses the impact of oil price changes on Spanish and euro area consumer price inflation. We find that the inflationary effect of oil price changes in both economies is limited, even though crude oil price fluctuations are a major driver of inflation variability. The impact on Spanish inflation is found to be somewhat higher than in the euro area. In both economies, direct effects have increased in the last decade, reflecting the higher expenditure share of households on refined oil products, whereas indirect and second-round effects seem to be losing importance.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999310001574
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 1 ()
Pages: 422-431

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:422-431
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

Keywords: Oil prices; Consumer price inflation; Spanish and euro area inflation; DSGE models;

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Find related papers by JEL classification:
  • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
  • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
  • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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