Oil Price Shocks and Inflation in a DSGE Model of the Global Economy

The 2022 inflation surge has renewed interest in the drivers of inflation, with special attention on the role of oil and other commodity prices given the large increase in these prices post-pandemic. In this note, we use a DSGE model of the global economy to quantify the impact on U.S. inflation and output of the oil shocks that drove oil prices up by about $45 per barrel in the first half of 2022, around Russia's invasion of Ukraine.