Title: Monetary policy and oil price fluctuations following the subprime mortgage crisis
Authors: Naoyuki Yoshino; Farhad Taghizadeh-Hesary
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.
Int. J. of Monetary Economics and Finance, 2014 Vol.7, No.3, pp.157 - 174
Submission date: 29 Mar 2014
Date of acceptance: 27 Jun 2014
Available online: 22 Dec 2014