If these effects are important, current consensus estimates of the natural rate of unemployment as well as of the “natural rate of capacity utilization” could overstate the degree of effective slack. I am skeptical of these arguments for a couple of reasons.
The share of crude oil in India’s import bill rose from 11 per cent in 1972–73 to 26 per cent by 1974–75. As exports improved, particularly to oil producing Middle-East countries, BoP recovered quickly from the first oil shock.