This Discussion Meeting will start at 17.30.
We look forward to seeing you on Monday 27 February.

The possibility of an Iranian oil embargo is looming on the horizon. This raises the question, once more, of how shortfalls in crude oil production caused by wars and other political events in the Middle East affect oil prices, economic growth and inflation in major industrialized countries. Public discussion of this question has been shaped by the economic experience of the 1970s and early 1980s. Our collective memory leaves no doubt that oil supply shocks are to blame for the economic malaise of the 1970s. An obvious concern is that history might repeat itself if a new oil supply shock were to occur. Drawing on new evidence, Lutz Kilian will re-examine the effects of previous OPEC oil supply disruptions on the G7 countries. The questions to be addressed include: Do oil supply shocks cause a sustained increase in inflation? Can we expect a recession following such a shock? How long will it take for the recession to set in and how deep and protracted will it be? Do oil shocks by necessity cause 'stagflation', a term coined in the 1970s to denote periods of economic stagnation as well as inflation?

Discussion Paper 5404

*The World Economy and Finance Research Programme (WEF)

The World Economy and Finance Research Programme is funded by the Economic and Social Research Council (ESRC). The aim of this research programme is twofold. One is to advance our understanding of ways in which financial markets and financial policies influence major global issues such as poverty, development, growth and transition. The second is to analyse policy issues in an era of low inflation, increasingly integrated financial markets, changing demographics and trade patterns.

Programme Director: Professor John Driffill
School of Economics, Mathematics & Statistics
Birkbeck - University of London
Malet Street, London WC1E 7HX
Tel: 020 7631 6417

www.worldeconomyandfinance.org