Is This Time Different? Comparative Analysis of Supply Shocks in the 1970s and 2020s

Research Article
Open access

Is This Time Different? Comparative Analysis of Supply Shocks in the 1970s and 2020s

Bo Pang 1*
  • 1 RCF Experimental School    
  • *corresponding author pangbo@rdfzcygj.cn
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/42/20232086
AEMPS Vol.42
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-105-6
ISBN (Online): 978-1-83558-106-3

Abstract

Based on the supply shocks in the 1970s and 2020s, this study discusses the similarities and differences between the two periods qualitatively. While both periods experienced price increases due to reliance on imported oil and stock market crashes, there are distinct factors that make a repeat of stagflation unlikely. The current labor market remains strong, and inflation is showing signs of slowing down. In addition, the bargaining power is weaker now than in the 1970s; higher productivity resulting from innovative technology and the trend of a more integrated global economy, which help to mitigate the impact of inflation. Policy solutions are proposed to address the challenges of easing supply pressure, promoting industrial development, and ensuring employment. The three key policy suggestions are as follows: energy transition incentives, research and development grants, skills development initiatives. By adopting these policies, it is believed that governments will address supply pressure, foster industrial development and promote employment.

Keywords:

supply shock, stagflation, inflation, productivity, globalization

Pang,B. (2023). Is This Time Different? Comparative Analysis of Supply Shocks in the 1970s and 2020s. Advances in Economics, Management and Political Sciences,42,102-109.
Export citation

References

[1]. Paul L. Nixon's economic policies return to haunt the G.O.P. Review from the New York Times (1976).

[2]. Guan D.B, Wang D.P., Hallegatte S., et al. Global supply-chain effects of COVID-19 control measures. Nature Human Behaviour 4(6), 577-587 (2020).

[3]. NBC Homepage, https://www.nbcnews.com/business/economy/inflation-may-2022-consumer-prices-food-and-gas-rcna32774, last accessed 2022/06/11.

[4]. CNBC Homepage, https://www.cnbc.com/2022/02/03/uk-energy-bills-to-rise-by-over-50percent-in-april-as-ofgem-announces-hike.html, last accessed 2022/02/03.

[5]. Alan S.B., Jeremy B.R. The supply-shock explanation of the great stagflation revisited. CEPS Working Paper 176 (2008).

[6]. Robert B.B., Lutz K. Do we really know that oil caused the great stagflation? A monetary alternative. University of Chicago Press, Chicago (2002).

[7]. James D.H. Historical oil shocks. University of California, San Diego (2010).

[8]. Barthelemy B., Zhen H., Andrei A.L., et al. Global supply chains in the pandemic. Journal of International Economics 133, 103534 (2021).

[9]. David B., Emmanuel F. Supply and demand in disaggregated Keynesian economies with an application to the COVID-19 crisis. American Economic Review 112(5), 1397-1436 (2022).

[10]. Pedro B., et al. Is the COVID-19 pandemic a supply or a demand shock? Federal Reserve Bank of St. Louis (2020).

[11]. Edward N. The great inflation of the seventies: What really happened? Topics in Macroeconomics (2005).

[12]. Michael W., Yuriy G., Olivier C. The expected, perceived, and realized inflation of US households before and during the COVID-19 pandemic. IMF Economic Review, 71 (2022).

[13]. Jesse L., Ana M.S. Global supply chain disruptions and inflation during the Covid-19 pandemic. Federal Reserve Bank of St. Louis Review (2022).

[14]. Adam H.S. How much do supply and demand drive inflation? FRBSF Economic Letter, 15 (2022).

[15]. Ha J., Kose A.M., Ohnsorge F. Global stagflation. MPRA Paper, 113306 (2022).

[16]. Peter S. Europe’s energy crisis will trigger its worst neuroses. The Economist, 9 (2022).

Cite this article

Pang,B. (2023). Is This Time Different? Comparative Analysis of Supply Shocks in the 1970s and 2020s. Advances in Economics, Management and Political Sciences,42,102-109.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-105-6(Print) / 978-1-83558-106-3(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.42
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Paul L. Nixon's economic policies return to haunt the G.O.P. Review from the New York Times (1976).

[2]. Guan D.B, Wang D.P., Hallegatte S., et al. Global supply-chain effects of COVID-19 control measures. Nature Human Behaviour 4(6), 577-587 (2020).

[3]. NBC Homepage, https://www.nbcnews.com/business/economy/inflation-may-2022-consumer-prices-food-and-gas-rcna32774, last accessed 2022/06/11.

[4]. CNBC Homepage, https://www.cnbc.com/2022/02/03/uk-energy-bills-to-rise-by-over-50percent-in-april-as-ofgem-announces-hike.html, last accessed 2022/02/03.

[5]. Alan S.B., Jeremy B.R. The supply-shock explanation of the great stagflation revisited. CEPS Working Paper 176 (2008).

[6]. Robert B.B., Lutz K. Do we really know that oil caused the great stagflation? A monetary alternative. University of Chicago Press, Chicago (2002).

[7]. James D.H. Historical oil shocks. University of California, San Diego (2010).

[8]. Barthelemy B., Zhen H., Andrei A.L., et al. Global supply chains in the pandemic. Journal of International Economics 133, 103534 (2021).

[9]. David B., Emmanuel F. Supply and demand in disaggregated Keynesian economies with an application to the COVID-19 crisis. American Economic Review 112(5), 1397-1436 (2022).

[10]. Pedro B., et al. Is the COVID-19 pandemic a supply or a demand shock? Federal Reserve Bank of St. Louis (2020).

[11]. Edward N. The great inflation of the seventies: What really happened? Topics in Macroeconomics (2005).

[12]. Michael W., Yuriy G., Olivier C. The expected, perceived, and realized inflation of US households before and during the COVID-19 pandemic. IMF Economic Review, 71 (2022).

[13]. Jesse L., Ana M.S. Global supply chain disruptions and inflation during the Covid-19 pandemic. Federal Reserve Bank of St. Louis Review (2022).

[14]. Adam H.S. How much do supply and demand drive inflation? FRBSF Economic Letter, 15 (2022).

[15]. Ha J., Kose A.M., Ohnsorge F. Global stagflation. MPRA Paper, 113306 (2022).

[16]. Peter S. Europe’s energy crisis will trigger its worst neuroses. The Economist, 9 (2022).

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.