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But the time scale of oil price increases is much faster than that of reorganization of the economy, so in the short term one can assume that the zeroth-order impact of an oil price change, especially given the low price elasticity of oil demand, is to add/subtract the extra cost of the exported/imported oil to the GDP.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Thu May 29th, 2008 at 05:39:55 PM EST
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