Oil Prices and the World Economy

  title={Oil Prices and the World Economy},
  author={Ray Barrell and Olga Pomerantz}
oil prices have been associated with bouts of inflation and economic instability over the last 30 years. Consequently, the rise of oil prices in recent months has generated concern. We argue that the inflationary consequences of a rise in oil prices depend upon the policy response of the monetary authorities. They can ameliorate the short-term impacts on output, but only at the cost of higher inflation. In the short term, the size and distribution of output effects from an increase in oil… CONTINUE READING