No. 790 - Inflation and energy price shocks: lessons from the 1970s

by Francesco Corsello, Matteo Gomellini and Dario Pellegrino
July 2023
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The paper examines the oil-price shocks that impacted on the global economy in the 1970s, leading to high rises in inflation that proved to be considerably long-lasting in some advanced countries.

We investigate the possible reasons for the failure of monetary policy to contain price rises at that time, and show how certain institutional features, namely the lack of central bank independence, the automatic indexation of wages to prices, a high level of conflict in industrial relations, and a set of fiscal policy rules that led to growing imbalances between public expenditure and tax revenues, may have significantly contributed to inflation persistence.

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  1. 25 July 2023
    No. 790 - Inflation and energy price shocks: lessons from the 1970s
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