The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s?

Olivier Blanchard () and Jordi Galí ()
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Jordi Galí: http://www.econ.upf.edu/en/people/onefaculty.php?id=p769

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We characterize the macroeconomic 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: Great moderation; supply shocks; stagflation; monetary policy; real wage rigidities (search for similar items in EconPapers)
JEL-codes: E20 E32 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ene, nep-his and nep-mac
Date: Written
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Related works:
Chapter: The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s? (2007)
Working Paper: The Macroeconomic Effects of Oil Price Shocks: Why are the 2000s so different from the 1970s? (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:upf:upfgen:1045

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