Tuesday, January 26, 2016

Who’s afraid of cheap oil? Low energy prices ought to be a shot in the arm for the economy.

ALONG with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.

Read more at the Economist
(Hat tip: KimR)


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