Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
After an oil price shock was impacted upon the other five variables in the model, many interesting results were found.
I have already demonstrated that oil Granger causes inflation, therefore it is expected that after a shock was applied to the oil price statistic, inflation would respond. The middle right graph from Fig. 4.4 depicts the response of inflation to an oil price shock, with the analytical two-standard-error bands. Certain characteristics of the response should be noted as they are crucial in understanding the problem of the project. Firstly, for the first four quarters, it can be seen that after a shock, the inflation rate rises rather steeply by approx. 0.5. This means that in the immediate aftermath of an oil price shock, the UK inflation rate will respond by increasing. The level of inflation reaches the maximum point at the third quarter. This shows that in the short run, the impact of an oil price shock to inflation is significantly negative. Secondly, inflation then calms and reduces through the next 8-10 quarters as the shock has been absorbed by the economy, and when the oil price decreases and stabilises, inflation decreases commensurately.Finally, it can be seen that inflation will return to its normal trend pattern 20 quarters after the initial shock. Whilst this may seem surprising, the result supports the business cycle theory, that over a five year period, an economy is likely to see peaks and troughs in its macroeconomic variables. This result follows economic theory, that due to its price inelasticity (Cooper 2003) and importance to the UK economy, should a shock be impacted upon oil prices, consumption of oil will not significantly drop, resulting in a form of cost-push inflation.
What are the pros and cons of monetization of public debt
1.the AD curve represents at the same time the demand for goods, money and labor in the economy 2.in the AS-AD model, higher competition among producers leads to a medium run equil
what is credit creation process
Separation of growth and fluctuation It is very useful to separate the evolution of a variable which grows over time into a trend and fluctuations around the trend. The graphs
what is the use of national income statistics as an indicator for a country''s standard of living?
What are the comparative benefit The idea of comparative benefit defines that a nation must specialise in the industries in which it has a comparative advantage. Comparative be
does central bank determine money supply in the economy
is there a graph for says law?
How can we determine fixed exchange rate If a nation has a fixed exchange rate (say against a specific currency), the government or central bank may change this fixed exchange
Examine the efficiency of quanttitative credit control instrument
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd