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Monetary Policy Dynamics in Large Oil-Dependent Economies


  • Wohltmann, Hans-Werner
  • Winkler, Roland C.


The paper analyzes the impacts of anticipated and unanticipated monetary policies on two large open economies that are dependent upon raw materials imports from a small third country. The analysis is based on asymmetric behavior on the supply side of both economies and an endogenous commod- ity pricing equation of Phillips' curve type. It is shown that an increase in the growth rate of domestic money supply is not neutral in the long run but induces contractionary output effects in both economies. The paper also dis- cusses the impacts of monetary policy rules that either reduce the in°ationary or contractionary output effects of commodity price shocks.

Suggested Citation

  • Wohltmann, Hans-Werner & Winkler, Roland C., 2005. "Monetary Policy Dynamics in Large Oil-Dependent Economies," Economics Working Papers 2005-17, Christian-Albrechts-University of Kiel, Department of Economics.
  • Handle: RePEc:zbw:cauewp:3834

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    References listed on IDEAS

    1. Willem H. Buiter & Marcus Miller, 1991. "Real Exchange Rate Overshooting and the Output Cost of Bringing Down Inflation," NBER Chapters,in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 239-277 National Bureau of Economic Research, Inc.
    2. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
    3. van der Ploeg, Frederick, 1987. "International Interdependence and Policy Coordination in Economies with Real and Nominal Wage Rigidity," CEPR Discussion Papers 217, C.E.P.R. Discussion Papers.
    4. Robert Anderton & Filippo di Mauro & Fabio Moneta, 2004. "Understanding the impact of the external dimension on the euro area - trade, capital flows and other international macroeconomic linkages," Occasional Paper Series 12, European Central Bank.
    5. Masanao Aoki, 1975. "On a Generalization of Tinbergen's Condition in the Theory of Policy to Dynamic Models," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 293-296.
    6. Bennett T. McCallum, 2001. "Should Monetary Policy Respond Strongly to Output Gaps?," American Economic Review, American Economic Association, vol. 91(2), pages 258-262, May.
    7. Bhandari, Jagdeep S., 1981. "The simple macroeconomics of an oil-dependent economy," European Economic Review, Elsevier, vol. 16(2), pages 333-354.
    8. Obstfeld, Maurice & Rogoff, Kenneth, 1995. "Exchange Rate Dynamics Redux," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 624-660, June.
    9. Clausen, Volker & Wohltmann, Hans-Werner, 2005. "Monetary and fiscal policy dynamics in an asymmetric monetary union," Journal of International Money and Finance, Elsevier, vol. 24(1), pages 139-167, February.
    10. Manasse, Paolo, 1991. "Fiscal Policy in Europe: The Credibility Implications of Real Wage Rigidity," Oxford Economic Papers, Oxford University Press, vol. 43(2), pages 321-339, April.
    11. Stephen J. Turnovsky, 2000. "Methods of Macroeconomic Dynamics, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262201232, January.
    12. Turnovsky, Stephen J, 1986. "Monetary and Fiscal Policy under Perfect Foresight: A Symmetric Two-country Analysis," Economica, London School of Economics and Political Science, vol. 53(210), pages 139-157, May.
    13. Bhandari, Jagdeep S. & Turnovsky, Stephen J., 1984. "Materials price increases and aggregate adjustment in an open economy : A Stochastic Approach," European Economic Review, Elsevier, vol. 25(2), pages 151-182, July.
    14. Fukuda, Shin-ichi & Hoshi, Takeo & Ito, Takatoshi & Rose, Andrew, 2006. "International Finance," Journal of the Japanese and International Economies, Elsevier, vol. 20(4), pages 455-458, December.
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    More about this item


    Monetary Policy; Oil Price Shocks; International Policy Coordination;

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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