Resource title

Anticipated and unanticipated oil price shocks and optimal monetary policy

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Resource description

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.

Resource author

Hans-Werner Wohltmann, Roland C. Winkler

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22053

Resource license

Adapt according to the presented license agreement and reference the original author.