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Title:Anticipated Raw Materials Price Shocks and Monetary Policy Response - A New Keynesian Approach PDF Logo
Authors:Winkler, Roland C.
Wohltmann, Hans-Werner
Issue Date:2006
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2006,19
Abstract:The paper analyzes the dynamic effects of anticipated raw materials price increases for small open oil-dependent economies and investigates the con- sequences of several monetary policy rules in response to commodity price shocks. Based on a calibrated New Keynesian open economy model the analysis shows that anticipated increases in the price of oil will involve oil- dependent economies both in temporary inflation and deflation as well as in output expansion and contraction. Compared to an interest rate Taylor rule a money growth rule is more appropriate to reduce the volatility of the CPI inflation rate whereas just the opposite holds for stabilizing the output gap.
Subjects:Oil price shocks
Monetary Policy
Open Economy
JEL:E32
E52
F41
Q43
Document Type:Working Paper
Appears in Collections:Economics Working Papers, Department of Economics, CAU Kiel

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