Monetary Policy Response to Oil Price Shocks

Material TypeArticleLanguageEnglish
TitleMonetary Policy Response to Oil Price Shocks Author(S)JEAN-MARC NATAL (Author)
Abstract  optimal monetary policy;oil shocks;divine coincidence;simple rules How should monetary authorities react to an oil price shock? This paper shows that in a noncompetitive economy, policies that perfectly stabilize prices entail large welfare costs, hence explaining the reluctance of policymakers to enforce them. The policy trade-off is nontrivial because oil (energy) is an input to both production and consumption. ...Paginationp53–101
Journal TitleJournal of Money, Credit, and Banking  
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