Oil price shocks and how they affect the Canadian economy were studied using a model that looks at the demand and supply of oil, as well as how domestic and foreign monetary policies interact. The research found that after an oil shock, domestic monetary policy plays a big role in affecting the country's output, accounting for over 40% of the changes over a 4-year period. On the other hand, US monetary policy has less impact on how oil price shocks affect an oil-exporting economy like Canada.