Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22053
Authors: 
Wohltmann, Hans-Werner
Winkler, Roland C.
Year of Publication: 
2008
Series/Report no.: 
Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2008,05
Abstract: 
This paper studies the welfare effects of severalmonetary policy rules in the presence of anticipated and unanticipated oil price shocks. Our analysis is based on a stylized New Keynesian model of a small open economy. Our main findings are the following: i) Standard interest rate rules amplify the welfare loss compared to neutral monetary policies. ii) The optimal policy under commitment, by contrast, dampens the welfare loss. iii) Optimized simple rules can replicate the outcome under the optimal unrestricted rule if they are history-dependent, contain the exchange rate and, in the anticipated case, forward-looking elements. iv) Anticipated oil shocks lead to a higher welfare loss than unanticipated shocks.
Subjects: 
Anticipated Shocks
Oil Price Shocks
Open Economy
Optimal Monetary Policy
Simple Policy Rules
JEL: 
E32
E52
F41
Document Type: 
Working Paper

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