The Macroeconomic Effects of Oil Price Shocks [chapter]

Olivier J. Blanchard, Jordi Galí
International Dimensions of Monetary Policy  
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
more » ... tary policy. We conclude that all four have played an important role. * We are grateful for helpful comments and suggestions to
doi:10.7208/chicago/9780226278872.003.0008 fatcat:wq5pybxv6jgv5gxizyv7nr5abq