IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Did Easy Money in the Dollar Bloc Fuel the Oil Price Run-Up?

  • Christopher Erceg

    (Federal Reserve Board)

  • Luca Guerrieri

    (Federal Reserve Board)

  • Steven B. Kamin

    (Federal Reserve Board)

Among the various explanations for the run-up in oil prices that occurred through mid-2008, one story focuses on the role of monetary policy in the United States and in developing economies. In this view, developing countries that peg their currencies to the dollar were forced to ease their monetary policies in response to reductions in U.S. interest rates, leading to economic overheating and higher oil prices. We assess that hypothesis using simulations of SIGMA, a multi-country DSGE model. Even when the currencies of many developing countries are pegged to the dollar rigidly, an easing of U.S. monetary policy leads to only a transitory run-up in oil prices. Instead, strong economic growth in many developing economies, as well as shortfalls in oil production, better explain the sustained run-up in oil prices observed between 2004 and 2008.

If 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.

File URL: http://www.ijcb.org/journal/ijcb11q1a6.pdf
Download Restriction: no

File URL: http://www.ijcb.org/journal/ijcb11q1a6.htm
Download Restriction: no

Article provided by International Journal of Central Banking in its journal International Journal of Central Banking.

Volume (Year): 7 (2011)
Issue (Month): 1 (March)
Pages: 131-160

as
in new window

Handle: RePEc:ijc:ijcjou:y:2011:q:1:a:6
Contact details of provider: Web page: http://www.ijcb.org/

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ijc:ijcjou:y:2011:q:1:a:6. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Timo Laurmaa)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.