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Oil 102507

Oil 102507

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Published by api-3828752

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Published by: api-3828752 on Oct 18, 2008
Copyright:Attribution Non-commercial


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Factors Affecting OIL Prices
Economic Growth
Exchange Rates
Marginal Producers
Lack of Investment
Violence in the Middle east
Emerging Concepts
The Oil Gauge Model
To assess the response of activity and inflation to higher oil prices
This model examines the impact of oil prices on inflation by looking both at
the long-run positive correlation between inflation and growth, as well as on
the asymmetric impact of oil prices on activity.
net oil price Increase is used which is real (inflation-
With the use of a VAR methodology, impulse response functions of
real activity and inflation to a 10% increase in the price of oil is

Our Oil gauge Model finds that a 10% increase in the price of oil shaves G7 real GDP by 0.15% in the first year and 0.30% over two years. The response of inflation to an oil price increase of 10% is 0.26% in the first year and 0.45% over two years. These estimates suggest that the developed economies have become better

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