It is clear that the economy behaved differently after the most recent oil-price shock than after the earlier ones. The behavior of output after the latest shock was completely different from earlier episodes. Indeed, the sign was opposite: output continued to grow relative to potential output after the shock, and unemployment continued to fall. The impact of the recent shock on inflation was qualitatively similar to that in past episodes although quantitatively different. Unlike with the shocks of the 1970s, there appears to have been no substantial pass-through of the energy-price increases into wages or other nonenergy prices.
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