Why haven't low oil prices delivered a "shot in the arm" to global economic growth as many economists had initially expected?
The International Monetary Fund (IMF) lays the blame squarely on the world's central banks, which have taken monetary policy into unchartered territory.
In a new blog post published today, co-authors Maurice Obstfeld, Gian Maria Milesi-Ferretti, and Rabah Arezki anaemic growth and low or even negative interest rates has sapped the economic benefits of low energy prices.
They said a slowing global economy prior to the oil price crash led many central banks to take interest rates as low as possible. But this meant there was little room left to cut when low oil prices reduced production costs.
The decline in inflation raised real interest rates [the nominal rate adjusted for inflation], constraining demand, as well as possibly stifling any increase in output and employment.
"Indeed, those aggregates may both actually fall. Something like this may be going on at the present time in some economies," they said.
Conversely, central banks hampered by deflationary pressures are unlikely to raise interest rates aggressively to combat an uptick in inflation.
"As a result, oil price increases, symmetrically, can be expansionary by lowering the real interest rate," they added.