Publication Type
Journal Article
Version
Preprint
Publication Date
5-2017
Abstract
A New Keynesian framework with endogenous energy production is proposed to investigate the role of monetary policy in addressing disturbances in energy markets. The novelty of the model lies in the endogenous production of energy with convex costs, explicit modeling of goods with different degrees of energy-dependency and sectoral price rigidities. Our analyses prescribe the desirable monetary responses to four types of energy price shocks, highlighting the distinct characteristics of each shock and affirming the need for diverse policy considerations. We also found several points of divergence in relation to previous studies on addressing energy supply shocks. In addition, we shed light on the role of sectoral price rigidities in the shocks' propagation.
Keywords
DSGE model, energy, energy price shock, monetary policy
Discipline
Economics | Energy Policy | Macroeconomics
Publication
B.E. Journal of Macroeconomics
Volume
17
Issue
2
First Page
1
Last Page
27
ISSN
1935-1690
Identifier
10.1515/bejm-2015-0113
Publisher
De Gruyter
Embargo Period
5-4-2017
Citation
HUYNH, Bao Tan.
Monetary policy and energy price shocks. (2017). B.E. Journal of Macroeconomics. 17, (2), 1-27. Research Collection School Of Economics.
Available at: https://ink.library.smu.edu.sg/soe_research/2106
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Additional URL
https://doi.org/10.1515/bejm-2015-0113