Monetary Effects on Nominal Oil Prices
نویسندگان
چکیده
The paper presents a theory of nominal asset prices for competitively owned oil. Focusing on monetary e¤ects, with exible oil prices the US dollar oil price should follow the aggregate US price level. But with rigid nominal oil prices, the nominal oil price jumps proportionally to nominal interest rate increases. We nd evidence for structural breaks in the nominal oil price that are used to illustrate the theory of oil price jumps. The evidence also indicates strong Granger causality of the oil price by US ination as is consistent with the theory.
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