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Oil Prices, Monetary Policy, and Recessions

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Oil price increases seem to have accompanied every recession since 1971. Yet concluding that oil price shocks cause recessions is problematic because increases in the funds rate also have tended to precede recessions during this period. Are recessions caused by spikes in oil prices or by sharp increases in monetary policy.

Suggested citation: "Oil Prices, Monetary Policy, and Recessions," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-10, pp. 06, 10.01.2004.

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