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TSO–TSO seams issues

The Challenges Ahead‎ for Transmission and Distribution

Jean-Michel Glachant

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New grey areas at the frontiers of European power grids

The Challenges Ahead‎ for Transmission and Distribution

Leonardo Meeus and Tim Schittekatte

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Introduction

The Challenges Ahead‎ for Transmission and Distribution

Edited by Leonardo Meeus and Jean-Michel Glachant

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DSO–TSO seams issues

The Challenges Ahead‎ for Transmission and Distribution

Leonardo Meeus and Samson Yemane Hadush

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Continental incentive regulation

The Challenges Ahead‎ for Transmission and Distribution

Vincent Rious and Nicolò Rossetto

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Classical grey areas since the start of the internal market

The Challenges Ahead‎ for Transmission and Distribution

Leonardo Meeus and Pradyumna Bhagwat

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The British reference model

The Challenges Ahead‎ for Transmission and Distribution

Vincent Rious and Nicolò Rossetto

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US monetary policy and the global crude oil market

Prices, Production and Consumption

Basil Oberholzer

When applying the hitherto theoretical analysis to the real world, there are some additional issues that should be enlightened. In this chapter, the specific case of US monetary policy and its implementation mechanisms are taken into account both for the period of conventional and so-called unconventional policies. Moreover, the global crude oil pricing system is presented. It shows that there are many factors, in addition to theory, which contribute to uncertainty in the market. An additional section investigates how the market for crude oil is related to other energy sources like natural coal and gas. Finally, we examine how monetary policy of a single country can influence the globally integrated oil market.

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Monetary policy and crude oil: a theoretical analysis

Prices, Production and Consumption

Basil Oberholzer

The first section of this chapter is dedicated to theories of money and financial markets in general. By confronting them we argue that the economy can be best understood by perceiving money as endogenous. Moreover, financial markets are not a mere reflection of the real economy determined by general equilibrium as claimed by neoclassical economics but may themselves well impact on economic fundamentals. These general features then are applied to the crude oil market. The central characteristic of crude oil is its dual nature: it is a physical good but serves as well as a financial asset in the form of futures contracts. Monetary policy effects through transmission channels are analyzed. It is found that monetary policy influences the oil price mainly through the futures market by means of speculation. The oil price itself affects investment behaviour in the spot market. We suggest that expansive monetary policy finally gives rise to a higher oil intensity of the economy.

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Basil Oberholzer

To begin with the empirical investigation in this chapter, the theoretical conclusions are summarized in a stock-flow consistent model, which is able to integrate the oil spot and futures markets and to reflect the dynamic effects of monetary policy. Subsequently, the two respective periods of conventional and unconventional monetary policy in the time frame of consideration (2000–14) are analyzed by means of structural VARs and a large number of Granger causality tests. These methods are supplemented by a new approach to oil inventories. All in all, despite many difficulties, the causal chain from monetary policy to changes in oil production and consumption can be broadly confirmed.