On the Sources of Oil Price Fluctuations

Deren Ünalmış, Ibrahim Unalmis and Filiz Unsal

No 2009/285, IMF Working Papers from International Monetary Fund

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: WP; equilibrium mark-up; price of oil; government spending shock; price volatility; oil price inflation; oil price shock (search for similar items in EconPapers)
Pages: 28
Date: 2009-12-01
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Citations: View citations in EconPapers (12)

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