Castillo, Paul; Montoro, Carlos; Tuesta, Vicente - EconWPA - 2005
In this paper we establish a link between the volatility of oil price shocks and a positive expected value of inflation … benchmark New Keynesian model with oil price shocks. In contrast with log linear approximations, the second order solution … even when there is no difference in the monetary policy rules between the pre-Volcker and post-Volcker periods, oil price …