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Monetary policy and the effect of the oil prices pass-through to inflation

Author

Listed:
  • Philipp Kartaev

    (MGIMO-University, Moscow, Russia
    Lomonosov Moscow State University, Moscow, Russia)

  • Ilya Medvedev

    (MGIMO-University, Moscow, Russia
    Lomonosov Moscow State University, Moscow, Russia)

Abstract

The paper examines the impact of oil price shocks on inflation, as well as the impact of the choice of the monetary policy regime on the strength of this influence. We used dynamic models on panel data for the countries of the world for 2000–2017. It is shown that the impact of changes in oil prices on inflation is carried out predominantly through the channel of exchange rate. The paper demonstrates the influence of the transition to inflation targeting on the nature of the relationship between oil price shocks and inflation. This effect is asymmetrical: during periods of rising oil prices, inflation targeting reduces the effect of the oil prices pass-through, limiting the negative effects of shock. During periods of decline in oil prices, this monetary policy regime, in contrast, contributes to a stronger pass-through, helping to reduce inflation.

Suggested Citation

  • Philipp Kartaev & Ilya Medvedev, 2019. "Monetary policy and the effect of the oil prices pass-through to inflation," Russian Journal of Economics, ARPHA Platform, vol. 5(3), pages 211-219, October.
    • Handle: RePEc:arh:jrujec:v:5:y:2019:i:3:p:211-219
    DOI: 10.32609/j.ruje.5.47349
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    Citations

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    Cited by:

    1. Ivan Aleksandrovich Kopytin & Nikolay Petrovich Pilnik & Ivan Pavlovich Stankevich, 2021. "Modelling Five Variables BVAR for Economic Policies and Growth in Azerbaijan, Kazakhstan and Russia: 2005 2020," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 510-518.
    2. Aziza Syzdykova & Aktolkin Abubakirova & Lyazzat Kudabayeva & Ardak Zhantayeva & Aizhan Omarova, 2022. "Asymmetric Causality Relationship between Oil Prices and Inflation in BRIC Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 184-191, May.

    More about this item

    Keywords

    oil prices; inflation targeting; exchange rate; pass-through effect; monetary policy.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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