Distributional Conflict Over Output Shares After an Oil Price Shock
An increase in the price of a critical import like oil triggers a distributional conflict over the value of output per worker. Foreign oil producers claim a larger portion, and to protect their own profit margins, domestic firms pass this cost increase on to consumers through higher prices. This process results in domestic workers receiving a smaller share of the output, which is reflected as a lower real wage on the price-setting curve.
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Introduction to Macroeconomics Course
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Distributional Conflict Over Output Shares After an Oil Price Shock
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