Download or read book Monetary Policy in an Oil Exporting Economy written by Franz Hamann and published by . This book was released on 2019 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The sudden collapse of oil prices poses a challenge to inflation-targeting central banks in oil-exporting economies. In this article, the authors illustrate this challenge and conduct a quantitative assessment of the impact of changes in oil prices in a small open economy in which oil represents an important fraction of its exports. They build a monetary, three-sector, dynamic stochastic general equilibrium model and estimate it for the Colombian economy. They model the oil sector as an optimal resource extracting problem and show that in oil-exporting economies the macroeconomic effects vary according to the degree of persistence of oil price shocks. The main channels through which these shocks pass to the economy come from the real exchange rate, the country risk premium, and sluggish price adjustments. Inflation-targeting central banks in such economies face a policy dilemma: raise the policy rate to fight increased inflation coming from the exchange rate passthrough or lower it to stimulate a slowing economy.

Download or read book Monetary Policy and the Oil Market written by Naoyuki Yoshino and published by Springer. This book was released on 2016-03-04 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt: While oil price fluctuations in the past can be explained by pure supply factors, this book argues that it is monetary policy that plays a significant role in setting global oil prices. It is a key factor often neglected in much of the earlier literature on the determinants of asset prices, including oil prices. However, this book presents a framework for modeling oil prices while incorporating monetary policy. It also provides a complete theoretical basis of the determinants of crude oil prices and the transmission channels of oil shocks to the economy. Moreover, using several up-to-date surveys and examples from the real world, this book gives insight into the empirical side of energy economics. The empirical studies offer explanations for the impact of monetary policy on crude oil prices in different periods including during the subprime mortgage crisis of 2008–2009, the impact of oil price variations on developed and emerging economies, the effectiveness of monetary policy in the Japanese economy incorporating energy prices, and the macroeconomic impacts of oil price movements in trade-linked cases. This must-know information on energy economics is presented in a reader-friendly format without being overloaded with excessive and complicated calculations. enUsed="false" QFormat="true" Name="Subtle Emphasis"/>

Download or read book Essays on Monetary Policy in an Oil Exporting Economy written by Mohamed Tahar Benkhodja and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this thesis is to analyze the impact of external shocks on oil exporting economies and the role of monetary policy in this context. It consists of three essays. In the first essay, we build a Multi-sector Dynamic Stochastic General Equilibrium (DSGE) model to investigate the impact of both windfall (an increase in oil price) and boom (an increase in oil resource) on an oil exporting economy. Our model is built to see if the two oil shocks (windfall and boom) generate, in the same proportion, a Dutch Disease effect. Our main findings show that the Dutch disease effect under its two main mechanisms, namely spending effect and resource-movement effect, occurs only in the case of flexible wages and sticky prices, when exchange rate is fixed. We also compare the source of fluctuations that leads to a strong effect in term of de-industrialization. We conclude that the windfall leads to a stronger effect than a boom. Finally, the choice of flexible exchange rate regime helps to improve welfare.In the second essay, we estimate, by using the Bayesian approach, a DSGE model for Algerian economy investigating the dynamic effect of four external shocks (oil price, real exchange rate, international interest rate and foreign inflation), and examining the appropriate monetary policy rule. Our main findings show that, over the period 1990Q1-2010Q4, core inflation target is the best monetary rule to stabilize both output and inflation. In the third essay, we investigate the impact of the recent increase of oil price on a small open oil exporting economy. For this, we estimate a Dynamic, Stochastic, General equilibrium (DSGE) model for some oil producing countries using the Bayesian approach. We consider, in this essay, a sample of 16 oil exporting countries (Algeria, Argentina, Ecuador, Gabon, Indonesia, Kuwait, Libya, Malaysia, Mexico, Nigeria, Oman, Russia, Saudi Arabia, United Arab Emirates, and Venezuela) over the period from 1980 to 2010, except for Russia where our sample begins in 1992. In order to distinguish between high-dependent and low-dependent countries, we use two indicators : the ratio of fuel exports to total merchandise exports and the ratio of oil exports to GDP. We estimate the median for each ratio on our 16 studied countries. Countries above (below) the median are considered as high (low) oil dependent economies. We verify if the first group is more sensitive to the Dutch disease effect. We also assess the role of monetary policy. Our main findings show that in the first sample, namely high oil dependant economies, 6 countries are affected by the Dutch disease (decrease in the manufacturing production). Low oil dependant countries, are less affected by the fluctuation of oil price. Indeed, only one country has suffered a Dutch disease effect after the shock. Nevertheless, Regarding the appropriate monetary policy rule, we find that both inflation targeting and exchange rate rules may be effective to contain the size of the Dutch disease effect. Our results suggest that in Algeria and Saudi Arabia, inflation targeting offers better performances. We observe the opposite in Gabon, Kuwait, Oman, and Venezuela. Such results are consistent with economic theory. Indeed, we see that in more open economies and smaller countries (in terms of economic size), the exchange rate rule is preferable to inflation rule. Venezuela seems an exception. Such country does not fulfill the traditional criteria favoring the choice of the exchange rule. In fact, this exception is only apparent. First, if we consider the volatility, we see that Venezuela is among the most volatile economy. Second, Venezuela suffers from a fiscal dominance effect: both inflation rate and fiscal deficit are the highest relative to other studied countries.

Download or read book Monetary Policy Implications for an Oil exporting Economy of Lower Long run International Oil Prices written by Franz Hamann S. and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Rethinking Fiscal Policy in Oil Exporting Countries written by Mr.Tokhir N Mirzoev and published by International Monetary Fund. This book was released on 2019-05-17 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the existing fiscal policy paradigm in commodity-exporting countries. First, we argue that its centerpiece—the permanent income hypothesis (PIH)—is not consistent with either intergenerational equity or long-term sustainability in the presence of uncertainty. Policies to achieve these goals need to be more prudent and better anchored than the PIH. Second, we point out the presence of a volatility tradeoff between government spending and wealth and re-assess long-held views on the appropriate fiscal anchors, the vice of procyclicality, and the (im)possibility of simultaneously smoothing consumption and ensuring intergenerational equity and sustainability. Finally, we propose what we call a prudent wealth stabilization policy that would be more consistent with long-term fiscal policy goals, yet relatively simple to implement and communicate.

Download or read book Monetary Policy and Crude Oil written by Basil Oberholzer and published by Edward Elgar Publishing. This book was released on 2017-07-28 with total page 389 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global crude oil market is critically important in many respects. It is the fuel that drives the global economy and, as such, is the focus of climate policies. Moreover, crude oil is the basis of a tradable financial asset. It is therefore connected to several outstanding macroeconomic developments of recent years, including financial market fluctuations, the financial crisis and the exceptional conduct of monetary policy. This book investigates the impacts of monetary policy and the financial system on the global crude oil market. Furthermore, it outlines how monetary policy may also be used to guarantee stability and to contribute to ecological sustainability.

Download or read book Effects of Oil Price on Monetary Policy in Major Oil Exporting Countries written by Pouya Jabal Ameli and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates impacts of oil price on monetary policy in oil-exporting countries. The second chapter reviews the forward-looking new Keynesian model, to show the need for credibility and conservativeness in order to have less inflation, which are the theoretical foundations of central bank independence (CBI). Then by defining CBI in detail and reviewing indices for CBI, the thesis looks at the empirical works undertaken in countries to see whether or not theory is supported in the real world. In the third chapter, the thesis applies central bank independence index to assess empirically the impact of an oil price shock on monetary policy in oil-exporting countries. Two legal central bank independence indices are chosen and calculated for the top nine oil-exporting countries. Using a panel data set and a fixed effects model, it is shown that a monetary authority with higher central bank independence implements a more contractionary (or less expansionary) monetary policy after an increase in oil price compared to another central bank which is more dependent. Chapter four considers linearity and specification tests along with estimating in vector smooth transition regression (VSTR) models and tries to improve them. In the empirical section, a VAR model with time varying coefficients are proposed to analyse the relationship between inflation and monetary policy in Iran as an oil-based economy. The form of coefficients is a logistic smooth transition function and oil price is used as the transition variable. This VSTR model has two different regimes based on high and low oil price and they have different dynamic properties. The model supports the asymmetric effects of real money and oil price on inflation and shows that the central bank cares more about inflation in the regime with high levels of oil price. This chapter also shows that forecasting of inflation with the VSTR is superior to forecasting using the linear VAR.

Download or read book International Dimensions of Monetary Policy written by Jordi Galí and published by University of Chicago Press. This book was released on 2010-03-15 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: United States monetary policy has traditionally been modeled under the assumption that the domestic economy is immune to international factors and exogenous shocks. Such an assumption is increasingly unrealistic in the age of integrated capital markets, tightened links between national economies, and reduced trading costs. International Dimensions of Monetary Policy brings together fresh research to address the repercussions of the continuing evolution toward globalization for the conduct of monetary policy. In this comprehensive book, the authors examine the real and potential effects of increased openness and exposure to international economic dynamics from a variety of perspectives. Their findings reveal that central banks continue to influence decisively domestic economic outcomes—even inflation—suggesting that international factors may have a limited role in national performance. International Dimensions of Monetary Policy will lead the way in analyzing monetary policy measures in complex economies.

Download or read book Inflation Targeting in MENA Countries written by Mongi Boughzala and published by Springer. This book was released on 2011-07-26 with total page 339 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume assesses the current state of play for Middle East and North African countries, in the light of wider work on inflation targeting, and provides lessons from the evolution of monetary policy in Europe.

Download or read book Notes on the Underground written by Andrea Ferrero and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book World Crude Oil Markets written by Noureddine Krichene and published by International Monetary Fund. This book was released on 2006 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relationship between monetary policy and oil prices within a world oil demand and supply model. Low price and high income elasticities of demand and rigid supply explain high price volatilities and producers' market power. Exchange and interest rates do influence oil market equilibrium. The relationship between oil prices and interest rates is a two-way relationship that depends on the type of oil shock. During a supply shock, rising oil prices caused interest rates to increase; whereas during a demand shock, falling interest rates caused oil prices to rise. Record low interest rates led to high oil price volatility in 2005. Data shows that world economic growth and price stability require stable oil markets and therefore more prudent monetary policies.

Download or read book Oil and the International Economy written by Georg Koopmann and published by Routledge. This book was released on 2022-01-26 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt: The oil price increases of the 1970s left deep marks on the world economy. They led to a massive redistribution of income in favor of oil-producing countries, and caused serious disruption of growth, imbalances in foreign trade, and problems of stability in oil-importing countries. Despite the present levelling off, the authors suggest that more price increases remain a distinct possibility.Oil and the International Economy examines the effects of rising oil prices on the international financial system and identifies ways that oil-importing countries can overcome the financial and adjustment problems caused by them. The authors project the long-term trend in real oil prices and present economic policy options to help avoid future financial problems for industrialized and developing nations alike.

Download or read book Economic Diversification in Oil Exporting Arab Countries written by International Monetary Fund and published by International Monetary Fund. This book was released on 2016-04-29 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: countries face similar challenges to create jobs and foster more inclusive growth. The current environment of likely durable low oil prices has exacerbated these challenges. The non-oil private sector remains relatively small and, consequently, has been only a limited source of growth and employment. Because oil is an exhaustible resource, new sectors need to be developed so they can take over as the oil and gas industry dwindles. Over-reliance on oil also exacerbates macroeconomic volatility. Greater economic diversification would unlock job-creating growth, increase resilience to oil price volatility and improve prospects for future generations. Macro-economic stability and supportive regulatory and institutional frameworks are key prerequisites for economic diversification...

Download or read book U S Monetary Policy Spillovers to GCC Countries Do Oil Prices Matter written by Mr.Olumuyiwa S Adedeji and published by International Monetary Fund. This book was released on 2019-12-27 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides empirical evidence that the size of the spillovers from U.S. monetary policy to non-oil GDP growth in the GCC countries depends on the level of oil prices. The potential channels through which oil prices could affect the effectiveness of monetary policy are discussed. We find that the level of oil prices tends to dampen or amplify the growth impact of changes in U.S. monetary policy on the non-oil economies in the GCC.

Download or read book Oil Exporters Economic Development in an Interdependent World written by Jahangir Amuzegar and published by . This book was released on 1983 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Cyclical Fiscal Rules for Oil Exporting Countries written by Stephen Snudden and published by International Monetary Fund. This book was released on 2013-11-06 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Structural budget-balance rules with countercyclical elements appear well suited to stabilize the macroeconomic volatility of oil-exporting countries and have been used successfully by other commodity exporters. Using a global DSGE model, the efficient design of such rules is found to depend on the source of oil price fluctuations and the oil exporters’ structural characteristics. The output-inflation tradeoff is of particular concern for oil exporters relative to non-oil exporters due to the pass through of oil prices into headline inflation. Fiscal rules are best when coordinated with inflation targeting monetary policy, but are still desirable for fixed exchange rate regimes.

Download or read book Fiscal Policy and Economic Cycles in Oil exporting Countries written by Aasim M. Husain and published by . This book was released on 2008 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper empirically assesses the impact of oil price shocks on the underlying non-oil economic cycle in oil-exporting countries. Panel VAR analysis and the associated impulse responses indicate that in countries where the oil sector is large in relation to the economy, oil price changes affect the economic cycle only through their impact on fiscal policy. Once fiscal policy changes are removed, oil price shocks do not have a significant independent effect on the economic cycle.