5  These factors are not the only two that have contributed to a lower effect of oil prices on inflation. For example, the energy intensity of the economy has fallen over time. Research like that in Hooker (2002) and subsequent work has discussed various possibilities in more detail.
Blanchard and Gali (2007) suggest that the seemingly muted affect of changes in the price of oil and inflation in recent years has been the result of falling energy intensity, more flexible labor markets, better monetary policy, and good luck. 6  See Lucas (1976).