ECO342H1 Chapter Notes - Chapter 10: Yom Kippur War, Nominal Interest Rate, Taylor Rule
Document Summary
Week 10: inflation of the 1970s: worldwide inflation in 1970s after 25 years of steady prices, originally attributed to cost-push, workers/unions demanding higher share of growing gdp. Scarcity of natural resources in 1970s: oil shocks 1974 and 1979. Blamed for end of full employment, equitable incomes of 1960s. Pressure on scare resources due to economic activity beyond full employment. Oil shocks of 1970s: opec founded in 1960 when wti was $. 297/barrel. Did not increase price until february 1967, and only to /barrel. Raises to . 07 in august 1967 as result of 6-day war with israel. Remained at . 56 from december 1970 to july 1973: first oil shock: january 1974, from . 31/barrel to . 11/barrel. Follows oil embargo on us and other israel allies in yom kippur war of. Alternative: correcting for depreciation of usd since 1971. Price of oil was depreciating relative to price of gold because rise in.
