| Summary: | <p>In this paper, we study the impact of fluctuations in global oil prices on inflation. For the purpose of finding out the effect of oil price on inflation rate, we have compared the data for the US and Russia by controlling for exchange, interest and growth rates, imports and exports, and money supply. The analysis covers quarterly data for period between 1999Q1 and 2014Q4. OLS and FGLS models are used by estimating them with Newey-West standard errors. The expected statistically significant positive effect of oil price on inflation rate was observed only for the US. However, the estimated effect for Russia was negative, though it was statistically insignificant. For the US, we found that a 10 percent increase in global oil priceincreases domestic inflation by about 3 percentage point. The impact of oil price shocks, however, has declined over time due in large part to a better conduct of monetary policy.</p><p><strong>Keywords: </strong>Econometric Analyses, Oil Price, Trade Balance, Inflation, USA, Russia</p><p><strong>JEL Classifications: </strong>E31, Q37, Q4<strong></strong></p>
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