Lecture Information:

The Economic Impact of Oil Supply Shocks on the G7 Countries

Berlin Lunchtime Meeting


SPEAKER: Lutz Kilian (University of Michigan and CEPR)

COMMENT: Thomas Bauer, Berlin correspondent of Bloomberg TV

CHAIR: Georg Meran, Vice-President, DIW Berlin  


Date: 1 March, 12-2 pm


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?


Thomas Bauer, Berlin correspondent of Bloomberg TV, explains the media's role in the economic impact of oil supply shocks. He shows how one of the world's largest financial news agencies watches and covers the oil market.