RT journal article
T1 Inflation, oil prices and exchange rates. The Euro’s dampening effect
A1 Garzón Gordon, Antonio José
A1 Hierro Recio, Luis Ángel
A2 Economía General
K1 Oil price
K1 Pass-through
K1 Inflation dynamics
K1 Exchange rate
AB This paper aims to analyse the relationship between the euro/dollar exchange rate and oil prices and examine what effect this relationship had on the transmission of oil price fluctuations to headline inflation in the euro area since the currency’s creation. We estimate an augmented Phillips curve including changes in oil price, through which we study the role of the exchange rate in oil price pass-through by using different specifications. The main findings reveal a positive relationship between the euro/dollar exchange rate and oil prices, such that an increase in the price of oil is followed by an appreciation in the euro. We also find that the transmission of oil price fluctuations to headline inflation in the euro area has been partially dampened by this appreciation in the euro/dollar exchange rate. These results do not hold for other economies with internationally relevant currencies, such as Japan and the United Kingdom. These findings have important implications for the implementation of monetary policy in the euro area in the face of oil price shocks.
PB Elsevier
YR 2022
FD 2022-02
LK http://hdl.handle.net/10498/34985
UL http://hdl.handle.net/10498/34985
LA eng
DS Repositorio Institucional de la Universidad de Cádiz
RD 08-nov-2026