Nature of Oil Price Shocks and Monetary Policy
Working Paper 15306
DOI 10.3386/w15306
Issue Date
We investigate the nature of oil price shocks to the Korean economy in recent years and find that the recent hike in oil price is induced by the increase in oil demand in contrast to the previous years when oil price run-up is mostly from supply disruptions. We also study how monetary responses to oil price shocks affect economic stability and find that an accommodative policy yields more stable outcomes.