英语论文网

ome (profit, interest, rent) are to be adjusted to general price level that includes the oil prices increases, the inflationary effect of oil prices become significant.

LeBlanc and Chin (2004) estimate the effect of oil prices on inflation for United States, United Kingdom, France, Germany and Japan using an augmented PHILLIPS CURVE framework. Statistical estimates suggests that current oil process increases likely to have only a modest effect on inflation in the U.S, Japan and Europe. Oil prices increases as much as 10 percentage points will lead to direct inflationary increases of about 0.1-0.8 percentage points in the U.S and E.U. Inflation in Europe traditionally thought to be more sensitive to the oil prices than in U.S is unlikely to show any difference in the sensitivity from than in the united states. He used a Dynamic stochastic general equilibrium model, which is tailored to reflect the characteristics of African economies. He quantified the effect of increase in oil prices on the main macroeconomics variable. Bouakez (2007) argues that high oil prices shocks would lead to an increase in inflation by much greater magnitude under managed than under a fixed exchange rate regime.

The Moses Kipyui in his article discussed the effect of oil prices on inflation. He is of the view that increase in oil prices and inflation are directly proportional to each other. This study approaches the Phillips curve to estimate the pass-through. It is found that oil prices have significant effect on inflation with pass-through of 0.05 in the short run and 0.1 in the long run employing that 10 percent increase in oil prices result 5 percent increase in inflation in the short run and 1 percent in the long run. It is also found that exchange rates have a significant influence on inflation with a pass through of 0.32 in the short run and 0,64 in the long run. The result is that when oil prices increases the inflation increases in the larger extent.

Siddiqui, Rehana; Akhtar, Naeem (December 22, 1999) done a case study of Pakistan in which they see the impact of exchange rate on prices. They want to examine the impact of changes in the monetary and real variables and changes in foreign prices on domestic prices of a country. To check the causality between changes in the exchange rate and domestic prices they applied the unit root test and error correction mechanism. The results of all variables show non stationary. Also they didn’t find any unidirectional or bi directional relationship between the two variables but they find that the money supply and level of activity effects domestic prices. The exchange rate and domestic prices also links with the oil prices shocks and inflation.

According to Kenyan, in his article discussed, he is of the view that oil prices seems to be highly correlated with inflation. The relationship between changes in inflation, changes in oil prices in dollars, changes in oil price in domestic currency and changes in nominal exchange rate. The relationship between these variables seems to be strong which also shows that increase in oil prices have direct effect on inflation. Because the economy is depend on the oil.

Khan and Gill (2010) have focused on the determinants of inflation in Pakistan using different price indicators i-e CPI, WPI, SPI, and GDP deflator. They have adopted time series data from 1971 to 2005 for the analysis. OLS method has been app