Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17748
Authors: 
Pierdzioch, Christian
Kamps, Christophe
Year of Publication: 
2002
Series/Report no.: 
Kiel Working Paper 1090
Abstract: 
This paper studies the relative performance of alternative monetary policy rules in the presence of oil price shocks in a small open economy optimizing model. Our analysis shows that it is important to distinguish between alternative price indices (CPI, core CPI, and GDP deflator) when modeling the effects of oil price increases. This distinction has important implications for monetary policy as the central bank has to decide which inflation rate to target. Our results demonstrate that targeting the change in the GDP deflator is an inferior monetary policy strategy in the presence of oil price shocks.
Subjects: 
Monetary policy rules
Open economy
Oil price shocks
Price indices
JEL: 
E32
E52
E58
E31
F41
Document Type: 
Working Paper

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