1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Inflation Responses to Recent Shocks

Do G7 Countries Behave Differently?

This paper uses a variety of empirical methods to examine the apparent differences in monetary policy stances as between the United States and other G7 economies, notably those in the euro area, during the period of sharp increases in oil and other commodity prices in the first half of 2008. In particular it asks the question whether observed differences in policy stances could be attributed to differences in economic structures and the vulnerability of different regions to inflationary shocks coming from import prices as opposed to differences in monetary policy objectives. The main conclusion is that although there are a number of differences in the estimated impact and dynamics of commodities, import prices and exchange rates on domestic inflation, which may have contributed to differences in policy stances during the boom in commodity prices, they cannot explain them all.

English

Keywords: inflation, DSGE model, error-correction model, Phillips curve, commodity prices, import prices
JEL: E52: Macroeconomics and Monetary Economics / Monetary Policy, Central Banking, and the Supply of Money and Credit / Monetary Policy; E31: Macroeconomics and Monetary Economics / Prices, Business Fluctuations, and Cycles / Price Level; Inflation; Deflation; J30: Labor and Demographic Economics / Wages, Compensation, and Labor Costs / Wages, Compensation, and Labor Costs: General
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