Oil shocks and Recessions

7:57 PM Posted by Baris Sanli

I found the following website and report quite useful for understanding oil shocks followed by recessions. Here is a list of my key points:

1. "the drops in overall spending that were caused by higher oil prices proved to be the knockout punch for an economy that was already wobbly"
2."The fact that the biggest drop in output didn't occur until well after the oil price went up, and resulted not from the oil price itself but instead from the interaction with other factors and the dynamic forces unleashed when the overall level of economic activity began to decline, is also exactly the same pattern we saw in each of the previous recessions."
3."Was the oil shock of 2007-08 the sole cause of the recession? Certainly not. But did it make a material contribution? In my opinion, the answer unquestionably is yes."
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