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This paper examines the impact of oil shocks on the G-7 countries using the time series data from 1975 to 2007. The pooled model was employed; from the results the authors found that oil shocks has no negative impact on the G-7 countries, due to the flexible labor markets, improvements in monetary policy and smaller share of oil in production, Indirect Tax Analogy, and flexible inflation targeting regimes. Since the discovery of oil in the US during the 19 century oil was a major source of disturbance on the global economy. The changes in oil prices were an important subject for many writers that examine the impact on oil price shocks on the economy in different aspects.
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