The 2014 decline in oil prices lowered short-run inflation. Before the Global Crisis, the medium-term correlation between oil prices and inflation was weak, but it has become much stronger since the onset of the Crisis. This column suggests that following the onset of the Crisis, inflation expectations reacted quite strongly to global demand conditions and oil supply shocks. The public’s belief in the ability of monetary authorities to stabilise inflation at the medium-term horizon has deteriorated.
Nathan Sussman, Osnat Zohar, Wednesday, September 16, 2015 - 00:00
Stefano Neri, Stefano Siviero, Saturday, August 15, 2015 - 00:00
EZ inflation has been falling steadily since early 2013, turning negative in late 2014. This column surveys a host of recent research from Banca d’Italia that examined the drivers of this fall, its macroeconomic effects, and ECB responses. Aggregate demand and oil prices played key roles in the drop, which has consistently ‘surprised’ market-based expectations. Towards the end of 2014 the risk of the ECB de-anchoring inflation expectations from the definition of price stability became material.
Sascha Bützer, Maurizio Michael Habib, Livio Stracca, Saturday, March 7, 2015 - 00:00
Lutz Kilian, Wednesday, January 14, 2015 - 00:00
Rabah Arezki, Olivier Blanchard, Tuesday, January 13, 2015 - 00:00
Christiane Baumeister, Lutz Kilian, Wednesday, November 19, 2014 - 00:00
Christiane Baumeister, Lutz Kilian, Xiaoqing Zhou, Tuesday, September 24, 2013 - 00:00
Recent work on forecasting oil prices raises the question of whether oil industry analysts know something about forecasting the price of oil that academic economists have missed. This column presents evidence that they do, but economists know how to improve further on these practitioners’ insights.
Lutz Kilian, Friday, June 29, 2012 - 00:00
It has long been argued that changes in the price of oil can help forecast US real GDP growth. This column addresses the common concern among many policymakers that the feedback from oil prices to the economy may become stronger once the price of oil reaches a certain level.
Michael Spence, Friday, April 8, 2011 - 00:00
Michael Spence of Stanford University talks to Viv Davies about growth prospects in the US and developing countries. He describes the current divergence between growth and employment in the US economy. They also discuss global imbalances, fiscal coordination in Europe, the global investment rate and the threat of rising oil prices to global growth. The interview was recorded in Washington DC in March 2011 at the IMF conference, ‘Macro and Growth Policies in the Wake of the Crisis’. [Also read the transcript.]
Francesco Lippi, Wednesday, June 11, 2008 - 00:00
High oil prices are back – more than $125 per barrel. Such prices are associated with the macroeconomic pains of the 1970s, but this column argues that the recent surge may actually be good news for developed economies’ industries. The logic lies in the difference between demand shocks and supply shocks.
Sergei Guriev, Anton Kolotilin, Konstantin Sonin, Saturday, April 12, 2008 - 00:00
The rising price of oil has been accompanied by nationalisations of oil assets, and the relationship is no mere coincidence. Recent research shows that higher oil prices trigger expropriations, particularly in countries with weak political institutions.
Daniel Gros, Friday, December 21, 2007 - 00:00
Coal’s supply elasticity is much higher than that of oil, so rising demand encourages substitution to dirty coal from cleaner oil – and switching is easy ex ante but hard ex post. In the next 10 years, China will install more power-generation capacity than Europe’s current stock. If it is all coal-burning, emissions will be difficult to reduce for decades. High oil prices are not part of the solution; they are part of the problem.
Art Durnev, Sergei Guriev, Wednesday, November 21, 2007 - 00:00
The consensus story: Resource abundance boosts GDP in the short-run but hinders or reverses the development of growth-enhancing institutions and thus long-run growth. New evidence suggests that this works by worsening corporate transparency, capital allocation and growth.