Oil shocks and the zero bound on nominal interest rates |
| |
| Institution: | 1. Università di Modena e Reggio Emilia, Italy;2. CEPR, United Kingdom;3. RECent, Italy;4. Universitat Autonoma de Barcelona, Spain;5. Barcelona GSE, Spain;1. Research Department, International Monetary Fund, 700 19th St. NW, Washington, DC 20431, USA;2. Department of Economics, Duke University, P.O. Box 90097, Durham, NC 27708, USA;3. Federal Reserve Bank of Atlanta, USA;4. CEPR, London, UK;5. FEDEA, Madrid, Spain;6. BBVA Research, Madrid, Spain;1. Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045, USA;2. Department of Economics, Boston College, Chestnut Hill, MA,USA |
| |
| Abstract: | Beginning in 2008, in many advanced economies, policy rates reached their zero lower bound (ZLB) and almost at the same time, oil prices started rising again. We analyze how the ZLB affects the propagation of oil shocks. As these shocks move inflation and output in opposite directions, their effects on economic activity are cushioned when monetary policy is constrained. The burst of inflation from an oil price increase lowers real interest rates at the ZLB and stimulates the interest-sensitive component of GDP, offsetting the usual contractionary effects. We show that the mitigation of the output decline from the zero lower bound depends on the source of the shock and on the persistence that alternative shocks induce in the price of oil. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
