Understanding Post Covid Inflation Dynamics

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Understanding Post Covid Inflation Dynamics

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Author : Martin Harding
language : en
Publisher: International Monetary Fund
Release Date : 2023-01-20

Understanding Post Covid Inflation Dynamics written by Martin Harding and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-01-20 with Business & Economics categories.

We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. The nonlinear Phillips curve in our model arises due to a quasi-kinked demand schedule for goods produced by firms. Our model can jointly account for the modest decline in inflation during the Great Recession and the surge in inflation during the Post-Covid period. Because our model implies a stronger transmission of shocks when inflation is high, it generates conditional heteroskedasticity in inflation and inflation risk. Hence, our model can generate more sizeable inflation surges due to cost-push and demand shocks than a standard linearized model. Finally, our model implies that the central bank faces a more severe trade-off between inflation and output stabilization when inflation is high.

Inflation In Emerging And Developing Economies

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Author : Jongrim Ha
language : en
Publisher: World Bank Publications
Release Date : 2019-01-03

Inflation In Emerging And Developing Economies written by Jongrim Ha and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-01-03 with Business & Economics categories.

This is the first comprehensive study in the context of EMDEs that covers, in one consistent framework, the evolution and global and domestic drivers of inflation, the role of expectations, exchange rate pass-through and policy implications. In addition, the report analyzes inflation and monetary policy related challenges in LICs. The report documents three major findings: In First, EMDE disinflation over the past four decades was to a significant degree a result of favorable external developments, pointing to the risk of rising EMDE inflation if global inflation were to increase. In particular, the decline in EMDE inflation has been supported by broad-based global disinflation amid rapid international trade and financial integration and the disruption caused by the global financial crisis. While domestic factors continue to be the main drivers of short-term movements in EMDE inflation, the role of global factors has risen by one-half between the 1970s and the 2000s. On average, global shocks, especially oil price swings and global demand shocks have accounted for more than one-quarter of domestic inflation variatio--and more in countries with stronger global linkages and greater reliance on commodity imports. In LICs, global food and energy price shocks accounted for another 12 percent of core inflation variatio--half more than in advanced economies and one-fifth more than in non-LIC EMDEs. Second, inflation expectations continue to be less well-anchored in EMDEs than in advanced economies, although a move to inflation targeting and better fiscal frameworks has helped strengthen monetary policy credibility. Lower monetary policy credibility and exchange rate flexibility have also been associated with higher pass-through of exchange rate shocks into domestic inflation in the event of global shocks, which have accounted for half of EMDE exchange rate variation. Third, in part because of poorly anchored inflation expectations, the transmission of global commodity price shocks to domestic LIC inflation (combined with unintended consequences of other government policies) can have material implications for poverty: the global food price spikes in 2010-11 tipped roughly 8 million people into poverty.

Understanding Inflation Dynamics The Role Of Global Shocks In Cemac

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Author : Johanna Tiedemann
language : en
Publisher: International Monetary Fund
Release Date : 2024-03-08

Understanding Inflation Dynamics The Role Of Global Shocks In Cemac written by Johanna Tiedemann and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-03-08 with Business & Economics categories.

As in the rest of the world, inflation in CEMAC surged more quickly and persistently than expected during the 2021–23 period. This paper examines the drivers of inflation dynamics and the contribution of global shocks to inflation persistence in CEMAC. We use a Phillips curve framework combined with the local projections method. Our results confirm the prominent role of global factors in driving inflation dynamics. Global commodity food and oil price fluctuations, and shipping costs are the main factors explaining the large variability in headline inflation. Further, we find that global price shocks have sizable and persistent effects on domestic headline inflation, with differences in the magnitude and speed of pass-through. The pass-through from commodity food price fluctuations to headline inflation is higher and more persistent than that of other global price shocks, reflecting the large share of food in the consumption baskets, which makes inflation more vulnerable to direct effects of international food shocks, but also larger second-round effects.

Global Value Chain And Inflation Dynamics

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Author : Vu Chau
language : en
Publisher: International Monetary Fund
Release Date : 2024-03-22

Global Value Chain And Inflation Dynamics written by Vu Chau and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-03-22 with Business & Economics categories.

We study the inflationary impacts of pandemic lockdown shocks and fiscal and monetary stimulus during 2020-2022 using a novel harmonized dataset of sectoral producer price inflation and input-output linkages for more than 1000 sectors in 53 countries. The inflationary impact of shocks is identified via a Bartik shift-share design, where shares reflect the heterogeneous sectoral exposure to shocks and are derived from a macroeconomic model of international production network. We find that pandemic lockdowns, and subsequent reopening policies, were the most dominant driver of global inflation in this period, especially through their impact on aggregate demand. We provide a decomposition of lockdown shock by sources, and find that between 20-30 percent of the demand effect of lockdown/reopening is due to spillover from abroad. Finally, while fiscal and monetary policies played an important role in preventing deflation in 2020, their effects diminished in the recovery years.

Macroeconomic Responses To The Covid 19 Pandemic

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Author : Neven Vidaković
language : en
Publisher: Springer Nature
Release Date : 2021-07-17

Macroeconomic Responses To The Covid 19 Pandemic written by Neven Vidaković and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-07-17 with Political Science categories.

This book examines economic policies utilized within Southeast Europe in response to the COVID-19 pandemic. Covering countries both within and outside the European Union, the human and economic cost of the pandemic is calculated using macroeconomic models from a short and longer term perspective. The economic policies used during the pandemic are analyzed, alongside crisis management approaches, to highlight the effectiveness of monetary policy, fiscal policies and potential future economic solutions for the post COVID-19 period. This book aims to provide policy recommendations based on findings from Southeast Europe. It is relevant to researchers and policymakers involved in economic policy and the political economy, as well as anyone interested in the responses to the COVID-19 pandemic.

Research Handbook On Inflation

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Author : Guido Ascari
language : en
Publisher: Edward Elgar Publishing
Release Date : 2025-06-09

Research Handbook On Inflation written by Guido Ascari and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-06-09 with Business & Economics categories.

This Research Handbook provides a comprehensive overview of the multifaceted landscape of inflation studies, policy, and practice. Analysing theoretical and empirical literature on measuring inflation and on the drivers of inflation dynamics, it sheds light on developments in monetary policy over the past two decades.

The Rise And Retreat Of Us Inflation

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Author : Laurence M. Ball
language : en
Publisher: International Monetary Fund
Release Date : 2025-05-16

The Rise And Retreat Of Us Inflation written by Laurence M. Ball and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-05-16 with categories.

Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos. This paper finds that the same framework explains the retreat in inflation since our earlier work.

Expectations Anchoring And Inflation Persistence

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Author : Mr.Rudolfs Bems
language : en
Publisher: International Monetary Fund
Release Date : 2018-12-11

Expectations Anchoring And Inflation Persistence written by Mr.Rudolfs Bems and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-12-11 with Business & Economics categories.

Understanding the sources of inflation persistence is crucial for monetary policy. This paper provides an empirical assessment of the influence of inflation expectations' anchoring on the persistence of inflation. We construct a novel index of inflation expectations' anchoring using survey-based inflation forecasts for 45 economies starting in 1989. We then study the response of consumer prices to terms-of-trade shocks for countries with flexible exchange rates. We find that these shocks have a significant and persistent effect on consumer price inflation when expectations are poorly anchored. By contrast, inflation reacts by less and returns quickly to its pre-shock level when expectations are strongly anchored.

Conflict Inflation

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Author : Maria Cristina Barbieri Góes
language : en
Publisher: Taylor & Francis
Release Date : 2025-03-11

Conflict Inflation written by Maria Cristina Barbieri Góes and has been published by Taylor & Francis this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-03-11 with Business & Economics categories.

This book brings together distinguished scholars who analyze the recent resurgence of inflation from the point of view of conflict among social classes over the appropriate distribution of income. For the better part of the past four decades, inflation remained low and stable in most industrialized economies—certainly close to the various inflation targets. As a result, inflation did not pose much of a policy threat, and economists’ attention was drawn elsewhere. Since 2020, however, the picture is very different. A pandemic followed by a war has led to a surge in inflation throughout the globe, the result of war, climate change emergencies, supply chain deficiencies, and other cost-related post-COVID problems (so-called greedflation). This surge in inflation has left many economists bewildered. Post-Keynesians, however, have proposed a sound explanation. For them, inflation is ‘always and everywhere’ a conflict phenomenon, and they have applied this view to the post-pandemic era. This book is a must-read to understand not only inflation in normal times but also in times of crises. It is an essential read for students, policymakers and scholars in the fields of economics, social sciences, and public policy. The chapters in this book were originally published as a special issue of Review of Political Economy.

The Shifting And Steepening Of Phillips Curves During The Pandemic Recovery International Evidence And Some Theory

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Author : Tryggvi Gudmundsson
language : en
Publisher: International Monetary Fund
Release Date : 2024-01-12

The Shifting And Steepening Of Phillips Curves During The Pandemic Recovery International Evidence And Some Theory written by Tryggvi Gudmundsson and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-01-12 with Business & Economics categories.

We study the global inflation surge during the pandemic recovery and the implications for aggregate and sectoral Phillips curves. We provide evidence that Phillips curves shifted up and steepened across advanced economies, and that differences in the inflation response across sectors imply the relative price of goods has been pro-cyclical this time around rather than a-cyclical as during previous cycles. We show analytically that these three features emerge endogenously in a two-sector new-Keynesian model when we introduce unbalanced recoveries that run against a supply constraint in the goods sector. A calibrated exercise shows that the resulting changes to the output-inflation relation are quantitatively important and improve the model's ability to replicate the inflation surge during this period.