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Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

Understanding how well the fuel market (or its prices) are linked to a country’s macroeconomy has both fiscal and monetary policy coordination implications. This note attempts to provide an understanding of how shocks from the fuel market impact the macroeconomy and vice versa. Our results are novel: we show that Fiji’s macroeconomy only absorbs a maximum of 31% of shocks from the system, implying that most movements in the macroeconomy are due to fundamentals and not the fuel market. The key policy message is that pricing behavior and any price controls associated with the fuel market will not have negative macroeconomic connotations.

First Page

437

Last Page

444

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Australia

Affiliation

Monash University

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