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An Empirical Note on the Inflation Impact of the Price of Imported Crude Oil: The Case of Germany

Author

Listed:
  • Cebula, Richard
  • Saadatmand, Yassaman
  • Piccone, Yvonne

Abstract

This study empirically investigates whether the assumption of the monetary authority in pre-2000 Germany that rising prices of imported crude oil would lead to domestic inflation in Germany had validity. In a model where unemployment rate changes, money stock growth, and wage growth are all allowed for, OLS estimation reveals that although the inflation rate in Germany typically is not sensitive to increasing prices on imported crude oil, crude oil price "shocks" of 50 percent or more during any calendar year have in the past led to significant domestic inflation for the German economy.

Suggested Citation

  • Cebula, Richard & Saadatmand, Yassaman & Piccone, Yvonne, 2002. "An Empirical Note on the Inflation Impact of the Price of Imported Crude Oil: The Case of Germany," MPRA Paper 50887, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:50887
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    File URL: https://mpra.ub.uni-muenchen.de/50887/1/MPRA_paper_50887.pdf
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    References listed on IDEAS

    as
    1. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    2. Cebula, Richard J & Frewer, Michael, 1980. "Oil Imports and Inflation: An Empirical International Analysis of the 'Imported' Inflation Thesis," Kyklos, Wiley Blackwell, vol. 33(4), pages 615-622.
    3. Cebula , Richard J., 2000. "A Brief Empirical Note on the Impact of Crude Oil Prices on Domestic Inflation: The Case of the United States, 1965-1999," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 53(4), pages 449-454.
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    Cited by:

    1. Kamal P. Upadhyaya & Raja Nag & Franklin G. Mixon, 2023. "Causal Relationships between Oil Prices and Key Macroeconomic Variables in India," IJFS, MDPI, vol. 11(4), pages 1-10, December.
    2. Julio César Alonso & Diego Alexánder Martínez Quintero, 2017. "Impacto del precio del petróleo sobre el PIB de los países de la Alianza del Pacífico," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 9(2), pages 249-264, May.

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    More about this item

    Keywords

    inflation; price of imported crude oil; oil price shocks; Germany;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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