Supply Shocks in the Transition Towards an Inflation Targeting Reform: an Empirical Evidence for Guatemala
Supply shock effects comming from high import prices, such as the current oil price shock, are analyzed based on a dynamic semi-structural model calibrated for the Guatemalan economy. It is argued that a worldwide oil price increase affects domestic prices through a direct and an indirect channel. The former derives from the direct import of petroleum related products, which become more expensive, while the latter channel derives from the import of commodities whose production costs involve expenditures on any petroleum derivative product. In addition, three different central bank monetary policy responses to the oil shock namely a passive position, an output targeting policy, and inflation targeting are simulated and their results are compared. It is concluded that an inflation targeting regime, which is expected to be fully functioning in Guatemala by 2006 would be a better monetary policy response to contrarrest the negative effects of an oil shock, rather than the output targeting policy that is currently being undertaken.
|Date of creation:||Dec 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Julio J. Rotemberg & Michael Woodford, 1999.
"Interest Rate Rules in an Estimated Sticky Price Model,"
in: Monetary Policy Rules, pages 57-126
National Bureau of Economic Research, Inc.
- Julio J. Rotemberg & Michael Woodford, 1998. "Interest-Rate Rules in an Estimated Sticky Price Model," NBER Working Papers 6618, National Bureau of Economic Research, Inc.
- Laurence Ball & N. Gregory Mankiw, 1992.
"Relative-Price Changes as Aggregate Supply Shocks,"
NBER Working Papers
4168, National Bureau of Economic Research, Inc.
- Laurence Ball & N. Gregory Mankiw, 1993. "Relative-price changes as aggregate supply shocks," Working Papers 93-13, Federal Reserve Bank of Philadelphia.
- Ball, L. & Mankiw, G.H., 1992. "Relative-Price Change as Aggregate Supply Shocks," Harvard Institute of Economic Research Working Papers 1609, Harvard - Institute of Economic Research.
- Kilian, Lutz, 2005.
"Exogenous Oil Supply Shocks: How Big Are They and How Much do they Matter for the US Economy?,"
CEPR Discussion Papers
5131, C.E.P.R. Discussion Papers.
- Lutz Kilian, 2008. "Exogenous Oil Supply Shocks: How Big Are They and How Much Do They Matter for the U.S. Economy?," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 216-240, May.
- David Romer, 2000.
"Keynesian Macroeconomics without the LM Curve,"
NBER Working Papers
7461, National Bureau of Economic Research, Inc.
- Stephen J. Turnovsky, 1986.
"Supply Shocks and Optimal Monetary Policy,"
NBER Working Papers
1988, National Bureau of Economic Research, Inc.
- Bernanke, Ben S. & Gertler, Mark & Waston, Mark, 1997.
"Systematic Monetary Policy and the Effects of Oil Price Shocks,"
97-25, C.V. Starr Center for Applied Economics, New York University.
- Ben S. Bernanke & Mark Gertler & Mark Watson, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:354. 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: (Claudio Sepulveda)
If references are entirely missing, you can add them using this form.