Are Oil Shocks Inflationary?

Hooker, Mark A.
January 1999
Working Papers -- U.S. Federal Reserve Board's Finance & Economi;1999, p1
Working Paper
Working Paper
The intent of this paper is to estimate the effects of oil price changes on U.S. inflation in a Phillips curve framework that allows for some of the asymmetries, nonlinearities, and structural breaks that have been found in the literature on the real effects of oil price shocks. The author finds that since around 1980, oil price changes appear to have affected inflation only through their direct share in a price index. Before 1980, oil shocks contributed substantially to core inflation. Evidence indicates that a change in the reaction of monetary policy to oil shocks is part of the explanation. This working paper is available at the US Federal Reserve Board. You can access this site by going to www.federalreserve.gov/pubs/workingpapers.htm.


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