Oil price pass-through into inflation

This paper uses data from 19 industrialized countries to investigate oil price pass-through into inflation across countries and over time. A time-varying pass-through coefficient is estimated and the determinants of the recent declining effects of oil shocks on inflation are investigated. The appreciation of the domestic currency, a more active monetary policy in response to inflation, and a higher degree of trade openness are found to explain the decline in oil price pass-through.