On the Sources of Oil Price Fluctuations

On the Sources of Oil Price Fluctuations

Title : On the Sources of Oil Price Fluctuations
Number : 10/05
Author(s) : Deren Ünalmış, İbrahim Ünalmış, Derya Filiz Ünsal
Language : English
Date : March 2010
Abstract : Analyzing macroeconomic impacts of oil price changes requires first to investigate different sources of these changes and their distinct effects. Kilian (2009) analyzes the effects of an oil supply shock, an aggregate demand shock, and a precautionary oil demand shock. The paper’s aim is to model macroeconomic consequences of these shocks within a new Keynesian DSGE framework. It models a small open economy and the rest of the world together to discover both accompanying effects of oil price changes and their international transmission mechanisms. Our results indicate that different sources of oil price fluctuations bring remarkably diverse outcomes for both economies.
Keywords : Oil Price Fluctuations, Oil Demand and Oil Supply Shocks, Precautionary Demand Shock, Small Open Economy, DSGE Models
JEL Codes : C68, E12, F41

On the Sources of Oil Price Fluctuations
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