Monetary Policy and the Oil Market (ADB Institute Series on Development Economics)

While oil price fluctuations in the past can be explained by pure supply factors, this book argues that it is monetary policy that plays a significant role in setting global oil prices. It is a key factor often neglected in much of the earlier literature on the determinants of asset prices, including oil prices. However, this book presents a framework for modeling oil prices while incorporating monetary policy. It also provides a complete theoretical basis of the determinants of crude oil prices and the transmission channels of oil shocks to the economy. Moreover, using several up-to-date surveys and examples from the real world, this book gives insight into the empirical side of energy economics. The empirical studies offer explanations for the impact of monetary policy on crude oil prices in different periods including during the subprime mortgage crisis of 2008–2009, the impact of oil price variations on developed and emerging economies, the effectiveness of monetary policy in the Japanese economy incorporating energy prices, and the macroeconomic impacts of oil price movements in trade-linked cases. This must-know information on energy economics is presented in a reader-friendly format without being overloaded with excessive and complicated calculations. enUsed="false" QFormat="true" Name="Subtle Emphasis"/> Front Matter....Pages i-xviii Introductory Remarks: What’s Behind the Recent Oil Price Drop?....Pages 1-5 Impact of Expansionary Monetary Policy on Crude Oil Prices....Pages 7-27 Which Side of the Economy Is Affected More by Oil Prices: Supply or Demand?....Pages 29-53 How Did Monetary Policy Inflate Oil Prices Following the Subprime Mortgage Crisis?....Pages 55-73 Economic Impacts of Oil Price Fluctuations in Developed and Developing Economies....Pages 75-91 Monetary Policy in the Japanese Economy Incorporating Energy Prices....Pages 93-106 Macroeconomic Impacts of Oil Price Fluctuations in a Trade Linked Case....Pages 107-129 Concluding Remarks....Pages 131-135 Back Matter....Pages 137-143