The Relationship Between Oil Price and Korean Industrial Production and Inflation
In the 1970s and 1980s, the global economy experienced a stagflation characterized by a decline in output and rising inflation as a result of the first and second oil shocks. In the first oil shock, the US real GDP grew at a rate of 10.3% in the first quarter of 1973, but declined to −2.1% in the third quarter. In 1974, the economy grew at an average annual rate of −1.9%. The decline in the production of the economy lasted about a year and a half after the oil shock. Meanwhile, US consumer prices rose by 3.4% in 1972, but rose to 8.9% in 1973 and 12.1% in 1974, despite the economic downturn.
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