Title: Monetary policy and oil price fluctuations following the subprime mortgage crisis

Authors: Naoyuki Yoshino; Farhad Taghizadeh-Hesary

Addresses: Asian Development Bank Institute, Kasumigaseki Building 8F, 3-2-5 Kasumigaseki, Chiyoda-ku, Tokyo 100-6008, Japan ' Economics Department, Keio University, 2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan; Institute of Energy Economics, Japan (IEEJ), 1-13-1, Kachidoki, Chuo-ku, Tokyo 104-0054, Japan

Abstract: This study examines how monetary policy affected crude oil prices after the subprime mortgage crisis. Our earlier research found that easy monetary policy had a significant impact on energy prices during the period of 1980-2011. This paper finds that after the subprime mortgage crisis, the weaker exchange rate of the US dollar caused by the country's quantitative easing pushed oil prices in US dollars upward over the period of 2009-2012, by causing investors to invest in the oil market and other commodity markets while the world economy was in recession in this period. This trend had the effect of imposing a longer recovery time on the global economy, as oil has been shown to be one of the most important production inputs.

Keywords: crude oil prices; monetary policy; subprime mortgage crisis; exchange rates; oil price fluctuations.

DOI: 10.1504/IJMEF.2014.066482

International Journal of Monetary Economics and Finance, 2014 Vol.7 No.3, pp.157 - 174

Received: 02 Apr 2014
Accepted: 27 Jun 2014
Published online: 22 Dec 2014 *

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