Journal of Engineering and Applied Sciences
ISSN: Online 1818-7803ISSN: Print 1816-949x
Abstract
We conduct panel data analyses to investigate the impacts of oil price on determining domestic inflation in two groups of economies, namely the oil importing and oil exporting countries. Each group consists of ten countries. Besides, we also compare the relative effects of oil price with other shocks (domestic output, exporter’s production cost and real exchange rate) on domestic inflation. Our results show that oil price has significant impact on determining domestic inflation with larger pass-through rate into domestic inflation in oil importing countries. The oil’s impact is relatively smaller than the effects from other factors. The main determinants to domestic inflation include foreign production cost, GDP and real exchange rate. All variables (oil price, foreign producer cost, GDP and exchange rate) have long run impacts on domestic inflation but the impacts are not significant in the short run.
How to cite this article:
Siok Kun Sek and Tong Sheng Tan. Exploring the Impacts of Oil Price Shocks on Domestic Inflation.
DOI: https://doi.org/10.36478/jeasci.2016.1880.1885
URL: https://www.makhillpublications.co/view-article/1816-949x/jeasci.2016.1880.1885