Inflation effects from negative oil supply shock. by zafrada

inflation · @zafrada · Sep 29 '22

$7.10

Inflation effects from negative oil supply shock.

![image.png](https://files.peakd.com/file/peakd-hive/zafrada/23wCbbxA7S5StY72iTCVyKDBbon7fAqig38oGjuqCzEXBfMSWeKXfioaSh5nU1YeVDeLq.png)

Neat charts looking at the inflation effects of a negative oil supply shock. 

For core inflation (inflation that excludes food and energy), an oil supply shock doesn't really worsen core inflation. The pass-through effect of an oil price shock is offset by a decrease in demand caused by the oil shock.

For headline inflation on the other hand, the oil supply shock has a large supply effect on inflation. Though there is some demand effect on inflation too and this is driven by a substitution to non-oil fuels.

![image.png](https://files.peakd.com/file/peakd-hive/zafrada/23tcNhoQ1h5pfRixbAig5ku21aTn3MbWDF8LBxip1YEkgG7mb96d97WHWKm5gkhNUyufw.png)

Charts from this paper:
https://www.frbsf.org/economic-research/publications/working-papers/2022/18/?amp=1

👍 healthsquared, rubencress, yintercept, zafrada, nooses, flexbooth, arbitration, leguna, hassemich, alexmcq, trendylife, aristocat, hufflepuff, tonality, quigon, klobu, babyyoda, mingus, oluwoleolaide, sooty, honeybee, lockhart, bhelatnasudepan, higgs, helgachen, denilsonrio, sherrychan, maysun, lifecoma, trevorlp97, amylee, serenawu, ashely056, brianlam, allanlong, pomeline, picardoh, twinkledrop, meepins, marsbar, aipaws, momosan, trevormomo, michaelleeld, jawnz, holdo, ehizgabriel, clappy, poodles, liking, fefemz, rebeysa85

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