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Inflation Impact of the Price of Imported Crude Oil in a Large




This study empirically investigates whether the assumption of the monetary authority in Japan that rising prices on imported crude oil lead to domestic inflation in Japan has validity. In a model where real GDP growth, money stock growth, and the relative dependence on imported oil are allowed for, instrumental variables estimation reveals compelling evidence for the validity of this assumption. In particular, the greater the percentage increase in imported crude oil prices, the greater the domestic inflation rate. This impact is exacerbated the greater the percentage of oil consumption that is imported. In addition, oil price shocks involving imported crude oil price hikes of 40 percent or more in a given year further elevate the domestic inflation rate. Hence, it appears that this foundation of the monetary authority in Japan has validity

Suggested Citation

  • Cebula , Richard J. & Renas, Stephen M., 2003. "Inflation Impact of the Price of Imported Crude Oil in a Large," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 56(3), pages 315-322.
  • Handle: RePEc:ris:ecoint:0153

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    More about this item


    Inflation; crude; oil; prices; imported; inflation;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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