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Inflation, oil price volatility and monetary policy - ScienceDirect
Source: sciencedirect.com
Article summary:
1. The past fifty years have seen many periods of oil price shocks with different implications on economic activity and inflation.
2. Blanchard and Gali (2008) used a log-linear New Keynesian model to explore the link between oil price volatility and both average inflation and output.
3. This paper offers a closed-form solution for the link between average inflation and oil price volatility, showing that higher oil price volatility induces higher levels of average inflation.
Article analysis:
The article is generally reliable in its presentation of the research conducted by Blanchard and Gali (2008). It accurately summarizes their findings, as well as provides an explanation of how their log-linear New Keynesian model works. The article also provides a detailed description of the authors’ own research, which is based on a modified version of the same model. The authors provide an analytical solution to the problem at hand, which allows them to establish a link between average inflation and oil price volatility.
The article does not appear to be biased or one-sided in its reporting, as it presents both sides of the argument fairly. It also does not contain any unsupported claims or missing points of consideration; instead, it provides evidence for all claims made throughout the text. Furthermore, there are no unexplored counterarguments or promotional content present in the article; instead, it focuses solely on presenting facts and data related to the topic at hand. Additionally, possible risks associated with high levels of oil price volatility are noted throughout the text.
In conclusion, this article appears to be trustworthy and reliable in its presentation of information related to inflation, oil price volatility, and monetary policy.