Energy and Capital in a New-Keynesian Framework
The economic implications of oil price shocks have been extensively studied since the oil price shocks of the 1970s'. Despite this huge literature, no dynamic stochastic general equilibrium model is available that captures two well-known stylized facts: 1) the stagflationary impact of an oil price shock, together with 2) two possible reactions of real wages: either a decrease (as in the US) or an increase (as in Japan). We construct a New-Keynesian DSGE model, which takes the case of an oil-importing economy where oil cannot be stored and where fossil fuels are used in two different ways: One part of the imported energy is used as an additional input factor next to capital and labor in the intermediate production of manufactured goods, the remaining part of imported energy is consumed by households in addition to their consumption of the final good. Oil prices, capital prices and nominal government spendings are exogenous random processes. We show that, without capital accumulation, the stagflationary effect is accounted for in general, and provide conditions under which a rise (resp. a declinr) of real wages follows the oil price shock.
|Date of creation:||Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: 106-112 boulevard de l'Hôpital 75 647 PARIS CEDEX 13|
Phone: + 33 44 07 81 00
Fax: + 33 1 44 07 83 01
Web page: http://centredeconomiesorbonne.univ-paris1.fr/
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.:
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Jean Fouré & Agnès Bénassy-Quéré & Lionel Fontagné, 2012.
"The Great Shift: Macroeconomic projections for the world economy at the 2050 horizon,"
2012-03, CEPII research center.
- Jean Fouré & Agnès Bénassy-Quéré & Lionel Fontagné, 2012. "The Great Shift : Macroeconomic projections For the World Economy at the 2050 Horizon," PSE - G-MOND WORKING PAPERS hal-00962464, HAL.
- Christopher A. Sims & Jinill Kim & Sunghyun Kim, 2004.
"Calculating and Using Second Order Accurate Solution of Discrete Time Dynamic Equilibrium Models,"
Econometric Society 2004 North American Winter Meetings
411, Econometric Society.
- Christopher A. Sims & Jinill Kim & Sunghyun Kim, 2003. "Calculating and Using Second Order Accurate Solution of Discrete Time Dynamic Equilibrium Models," Computing in Economics and Finance 2003 162, Society for Computational Economics.
- Jinill Kim & Sunghyun Henry Kim & Ernst Schaumburg & Christopher A. Sims, 2003. "Calculating and using second order accurate solutions of discrete time dynamic equilibrium models," Finance and Economics Discussion Series 2003-61, Board of Governors of the Federal Reserve System (U.S.).
- Henry Kim & Jinill Kim & Ernst Schaumburg & Christopher A. Sims, 2005. "Calculating and Using Second Order Accurate Solutions of Discrete Time Dynamic Equilibrium Models," Discussion Papers Series, Department of Economics, Tufts University 0505, Department of Economics, Tufts University.
When requesting a correction, please mention this item's handle: RePEc:mse:cesdoc:12092. 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: (Lucie Label)
If references are entirely missing, you can add them using this form.