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TitleUnderstanding the large negative impact of oil shocks
Author(s)Conraria, Luís Aguiar
Wen, Yi
KeywordsOil prices
Real business cycle
Capacity utilization
Monopolistic competition
Issue dateJun-2007
JournalJournal of Money, Credit and Banking
Citation"Journal of Money, Credit and Banking". ISSN 0022-2879. 39:4 (Jun. 2007) 925-944.
Abstract(s)This paper offers a plausible explanation for the close link between oil prices and aggregate macroeconomic performance in the 1970s. Although this link has been well documented in the empirical literature, standard economic models are not able to replicate this link when actual oil prices are used to simulate the models. In particular, standard models cannot explain the depth of the recession in 1974–75 and the strong revival in 1976–78 based on the oil price movements in that period. This paper argues that a missing multiplier-accelerator mechanism from standard models may hold the key.
Publisher version
AccessOpen access
Appears in Collections:NIPE - Artigos em Revistas de Circulação Internacional com Arbitragem Científica

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