A natural starting point to discuss this topic is provided by current macroeconomic thinking on the determinants of inflation – which may be summarised under the heading of the New Keynesian Phillips Curve (NKPC).
According to this – now mainstream – building block of modern macro models, current  3  The fact that the recycling of oil revenues plays a more supportive role for oil-importing countries today than during past oil price shocks has been confirmed for Germany by research undertaken at the Bundesbank (Bundesbank, 2005).