monetary authority responds to that shock by changing its inflation objective. Specifically, higher inflation raises households … inflation and lower labor productivity following a negative energy shock is consistent with the stagflation of the 1970s. The … hours worked in post-World War II U.S. data. In our model, the real effects of an energy shock are amplified when the …

subsequent impact on the relative energy price, which varies depending on the type of shock. Our results suggest that, in order …