NCID Non-Resident Fellow, Rabah Arezki, has published his research on recent oil price depression on the International Monetary Fund’s iMFdirect blog. The article, co-written with Olivier Blanchard (Director of the IMF Research Group), explores the causes, diverse nature, and primary causes of the international slump in oil prices since June 2014. Titled Seven Questions about the Recent Oil Price Slump, Arezki and Blanchard apply quantitative models using eclectic datasets to address the most vital concerns around current oil prices.
Among their findings, they see that with many importers and exporters exhausting typical fiscal policy responses to oil prices, that more cutting measures will need to be taken to stabilize inflation and revenue. “In all countries, lower fiscal revenues, and the risk that prices remain low for some time, imply the need for some decrease in government spending.” Furthermore, “central banks forward guidance is crucial to anchor medium term inflation expectations in the face of falling oil prices.” In all, the authors develop strong arguments for continued vigilance and well-articulated policy at the national level, while also stressing the practical limits to low oil prices.
Apart from being published on the IMF blog, Rabah’s work was also picked-up and republished as articles by Financial Times, the Brookings Institute, and, Reuters, as well as being reposted across many development, economics, and finance blogs.