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How Changes in Oil Prices Affect the Macroeconomy

Staff Working Paper 2009-33 Brian DePratto, Carlos De Resende, Philipp Maier
We estimate a New Keynesian general-equilibrium open economy model to examine how changes in oil prices affect the macroeconomy. Our model allows oil price changes to be transmitted through temporary demand and supply channels (affecting the output gap), as well as through persistent supply side effects (affecting trend growth).
December 7, 2009

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