The macroeconomic effects of oil price shocks
Subtitle: why are the 2000s so different from the 1970s
By: [by] Olivier J. Blanchard [and] Jordi Gal.̕
Contributors: Gal,̕ Jordi, 1961-; Massachusetts Institute of Technology. Dept. of Economics
Edition: Rev.
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 07-21 [2008 revision]; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 07-21, 2008.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Number of pages: 75
Description: We characterize the macroeconomics performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the differences across episodes. We examine four different hypotheses for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more flexible labor markets, and (d) improvements in monetary policy. We conclude that all four have played an important role. Keywords: oil, oil price, inflation, credibility, oil share, Great moderation, supply shocks, stagflation, monetary policy, real wage rigidities. JEL Classifications: E20, E32, E52.
Notes: "August 17, 2007, revised: March 25, 2008."

Includes bibliographical references (p. 73-75).

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